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Wonga defends loans before grilling
Representatives from Wonga, QuickQuid and Mr Lender - three of the biggest payday lending firms - will appear before a committee of MPs
Payday lender Wonga has defended its record ahead of an expected grilling by MPs.
Chief operating officer Niall Wass warned against "jumping to conclusions" about his company, which has come under fire over the way it treats customers.
"I am not sitting here today saying that everything we do is perfect; what we are trying to do is use great technology to give a really fair, transparent service to customers," he said in an interview with ITV News At 10.
Mr Wass challenged the Archbishop of Canterbury, the Most Rev Justin Welby, who has criticised the payday loan companies, to use Wonga services.
"What I am asking him and others to do - go use the service, see if you think it is fair and transparent , take out £30 for 10 days, pay it back after a week and then judge us by our customers," he said.
His remarks came as Wonga made a film showing the positive experience of the "silent majority" of its customers, ahead of a session in the House of Commons when MPs will question payday loan companies.
Representatives from Wonga, QuickQuid and Mr Lender - three of the biggest payday lending firms - will appear before the Commons Business, Innovation and Skills Select Committee.
MPs are expected to follow up on a damning report by the Office of Fair Trading (OFT) which found "deep-rooted" problems in the way payday loans attract and treat customers.
Lenders have come under intense scrutiny from the Competition Commission and the Financial Conduct Authority (FCA) since the OFT report was published in September amid reports of widespread impropriety in the sector.
The committee hearing pre-empts the transferral of regulatory powers in the consumer credit market from the Office of Fair Trading to the FCA on April 1 2014. The new body, which came into being in April this year, has promised to strengthen protection for consumers.
To do so, it has been equipped with the power to impose unlimited fines and compel businesses to give people their money back when they have lost out due to poor treatment.
New curbs proposed by the body in October will force lenders to place "risk warnings'' on their promotions and advertising, urging consumers to "think'' before taking out a payday loan.
Richard Lloyd, the executive director of Which?, will also appear before the committee today. He welcomed the FCA's new role but said "the Government and regulators must go further to clean up the wider credit market".
Gillian Guy, chief executive of Citizens Advice Bureau, will also address the committee.
She said: "MPs have the opportunity to hammer home some hard truths from their constituencies. The payday loan industry has boomed as people struggle to cope with the rising cost of living, but it has failed to act responsibly.
"When I speak to MPs at the Select Committee, I will tell them how evidence from Citizens Advice finds that people are being given loans without any proper checks to make sure they can afford to pay them back. This sends borrowers into a spiral of debt which is very hard to get out of.
"Some payday lenders are misusing continuous payment authorities by emptying their customers' bank accounts without prior warning - leaving them without any money to get to work, pay the bills or buy food."
Payday lenders have also been criticised for aggressive advertising campaigns that reportedly mislead potential consumers. In July, the FCA's chief executive, Martin Wheatley, indicated that offending firms could face a complete advertising ban.
He said previously: "Clearly that is an option that could be considered if it was felt that the way that advertising was being used couldn't be dealt with through any other measures short of that.''
The MPs' intervention follows research by a Government-backed body that found more than one million people plan to take out a payday loan to cover the cost of Christmas.
The Money Advice Service (MAS) said one in 40 (2.44%) people surveyed for its research, equating to around 1.2 million across the UK, is thinking about turning to a payday lender to fund their seasonal spending.
One-third (32%) of the 2,000 consumers questioned also said they will ramp up their credit card debts to pay for the festivities, while one in every 11 (9%) people said they are still paying off what they owe from last Christmas.
Consumer Minister Jo Swinson said a "huge amount" had already been done by the Government to tackle concerns over payday lending.
"We are already taking enforcement action which has seen 25 payday lending firms leave the market in their entirety," she told ITV Day Break.
"While ... some customers manage OK with this type of lending when it is for an unbudgeted emergency, when it is actually a sign of deeper financial problems, if you can't afford to make ends meet at the end of the month, then actually what people need is not a loan, it is some debt advice."