Payday lenders to face regulator's 'sympathy test'

The City watchdog has announced it is to investigate lenders to see how sympathetic they are when customers struggle to pay back debts.

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Payday firms must treat borrowers with 'sensitivity'

The City regulator said struggling borrowers should be treated "with sensitivity" by payday firms and said that it expects that around one quarter of lenders will decide they cannot meet its higher consumer protection standards and leave the market when it takes over next month.

"There will be no place in an FCA-regulated consumer credit market for payday lenders that only care about making a fast buck," said Martin Wheatley, Financial Conduct Authority chief executive.

The FCA will examine the culture of each payday firm and it will want to see how they communicate, how they propose to help people regain control of their debt, and how sympathetic they are to each borrower's situation.

It is expected to work with lenders to find ways for them to share more up-to-date information about borrowers, to prevent them from handing out loans which turn out to be unaffordable.

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