Paydayparty warned by the Financial Conduct Authority

The online payday company, Paydayparty.co.uk, which issues loans at a Representative APR of as high as 1735% has been warned by the Financial Conduct Authority that they have not been authorised to operate in the UK. The regulatory agency is also reaching out to individuals to recommend that they do not borrow money from this firm and others that have not been given permission to offer their services.

Consumers across the UK should not be taking on loans from Paydayparty.co.uk. This company has not been authorized to perform credit activities in the UK. They are in effect operating illegally. If a person were to borrow money from them, they will then lose many of the protections that they would otherwise have from Financial Conduct Authority (FCA) regulations.

There is a tremendous amount of risk to borrowers if they use a firm such as Paydayparty. The most important ones are that the customer will not be protected from the key FCA rules including the Financial Services Compensation Scheme as well as the Ombudsman Service. Those two programmes were created solely for the reason of ensuring families are treated fairly by high priced lenders such as Paydayparty and other.

This will mean in effect that the borrower may not only be receiving a higher interest rate from this lender, but they will also not be able to receive compensation if they were treated unfairly or if the firm were to fail. Or if there is a dispute with Paydayparty.co.uk, the consumer will not have the ability to resolve it using the Ombudsman Service.

Not only is their risk to individuals in using a non-authorized lender, but the company is also offering funds to vulnerable people at an incredibly high APR of up to 1735%. Compare that to the interest rare on an credit card which may be 10-20%, and anyone can see that Paydayparty is offering money at a very high price to its customers.

What Paydayparty.co.uk claims they do is offer up to £1,000 to the borrower. The funds will be provided using a no credit check decision. Also, the firm promises the person can have that money in a short as 15 minutes.

This creates a dilemma for many of the vulnerable, hard-working people in the UK. They are often tempted by the “quick” cash, but the interest rates of up to an APR of 1735% makes the money almost impossible to repay. This can cause a borrower to go into the dreaded cycle of continuing to borrow more money to pay off an existing loan, which often leads to a financial crisis.

The Financial Conduct Authority strongly suggests people only use credit firms and lenders that they have authorised. This will help ensure all rules and regulations are being followed. It will also ensure all consumer rights are protected.

If there are any questions on which payday lenders have been given permission to offer credit services, the FCA can provide this information. Another option which is also recommend is to contact a local not-for-profit agency which provide free information to families, such as Citizens Advice.