Is The Payday Loans Industry Regulated?

With the wide variety of financial facilities being offered to consumers in the form of payday loans these days - many consumers sometimes wonder whether there is any regulation in the industry whatsoever - or whether it is simply a complete free-for-all.

This is a fair question to ask, because at times the interest rates being charged seem to resemble something out of a horror movie (i.e. 30% to 50%).

The truth is that the payday loans industry is indeed highly regulated by none other than the CFSA - which is a community of financial providers who work together with consumers to get the best possible deal for everyone when it comes to the range of financial facilities offered.

Regulation by the CFSA

Whilst the CFSA isn’t a government organisation as such - it does have very close ties with the government finance authorities and the banking industry, In this manner, consumers can be confident that they are not being taken advantage of unfairly.

How is this possible? Well - take a look at the requirements of all payday loans providers which are members of the CFSA:

• Interest rates must be within the target range for acceptable payday loans
• Application and termination fees must be “standard”
• Consumers should not be penalized for paying loans back early or changing their mind on loans already taken out
• All assistance possible should be given to consumers who find themselves in financial trouble as a result of taking out payday loans

If you want to be reassured when it comes to regulation of this industry - it is a good idea to speak to the finance company that you are dealing with about what regulation standards they have in place - and ask whether they are in fact a member of the CFSA.

If they are, this provides some level of comfort to you as a consumer, because you know that you will therefore be protected by the CFSA’s guidelines and restrictions put in place for all players in the industry to follow.

Non-Regulated Payday Loans Companies

If you come across a company which is not regulated by any financial authority, you should probably think twice before taking out a loan with them. This is because you will not have any means to dispute your loan or accounts if something goes wrong - and there is ultimately no accountability for that company to be fair or balanced at all.