A SCOTS payday loan firm has promised to change the way it offers loans and also how it treats customers struggling to repay debts.
The Financial Conduct Authority, which regulates the financial services industry in the UK, said it had reached an agreement with Edinburgh-based Cheque Centre Ltd that will see it suspend debt collection phone calls to customers and voluntarily exit the so-called "single instalment" payday loan market. These require borrowers to repay loans in a single lump sum.
Cheque Centre, which also trades foreign currency and cash for gold, will suspend debt collection phone calls to borrowers pending improvements in customer service.
Loading article content
However, it will be allowed to continue taking payments from customers in line with pre-agreed payment dates.
The changes come after serious concerns about poor practice were uncovered by the Office of Fair Trading.
Cheque Centre has 451 high street branches across the UK.
Martin Wheatley, chief executive of the Financial Conduct Authority, said: "This is an early victory for people that use payday lenders. We made our tougher expectations clear to Cheque Centre and it has wasted no time in making changes.
"I have said before that firms would need to dramatically improve their operation or exit the market, and we are now seeing that happening. "
The move comes amid concern about the number of payday loans being taken out, with a study published in November suggesting Citizens Advice Scotland's advisers were seeing more than 100 cases every week in Scotland of people in "crisis debt" to such lenders.