Teenage s suicide after Wonga emptied his bank account leads for calls for tighter payday loan rules, Daily Mail Online

By Sam Tonkin For Mailonline 08:12 GMT 25 Sep 2015, updated 15:23 GMT 25 Sep 2015

Latest From MailOnline

  • Kane Sparham-Price killed himself after Wonga emptied his bank account
  • The 18-year-old was left penniless after lender took payment for his debts
  • His death prompted a coroner to call for an overhaul of payday loan rules
  • Teenager spent time in foster care and had mental health problems
  • Wonga said it was sorry to hear of the tragedy but acted within guidelines

A coroner has called for a switch to payday loan rules after a disabled teenager killed himself on the same day Wonga left him penniless after emptying his bank account.

Kane Sparham-Price, Eighteen, from Ashton-under-Lyne, Greater Manchester, hanged himself after the loans company took payment for his debts under the terms he had agreed to.

After finding that the teenager had taken his own life, South Manchester Coroner John Pollard voiced concerns that there may be similar deaths in the future unless switches were made.

He wrote to the Financial Conduct Authority (FCA) in September last year, following the inquest into Mr Sparham-Price’s death, but details of the inquest have only just emerged in the media after being reported by Disability News Service.

Related Articles

In a report sent to the FCA, Mr Pollard said: ‘He was left with no money in his account and no means of borrowing any more.

‘Whilst I accept that the various payday lenders are legally entitled to “clear out” someone’s bank account if money is owing to them, it struck me that there ought to be a statutory minimum amount which must be left in an account (say £10) to avoid absolute destitution.’

He added: ‘As I understand you set and regulate the rules, you might look at this with a view to preventing further deaths.’

The inquest had been told that Mr Sparham-Price, who died in February 2013, had ‘numerous problems including those connected with his mental health’, and spent much of his life in foster care and care homes.

Shortly before his death he posted on Facebook, writing how he was looking forward to moving into a fresh vapid and waiting for a deposit to be arranged.

There is no suggestion Wonga acted unlawfully or that the lender was aware it had left Mr Sparham-Price with no money in his bank account.

The teenager began taking out an unspecified number of loans from Wonga when he turned Legal and left local authority care.

In its response to Mr Pollard’s report, published last October, the financial watchdog’s chief executive Martin Wheatley said that introducing the kind of ‘absolute destitution’ rule suggested by the coroner would be ‘undesirable’.

After providing a number of reasons why it would be unlikely to work, including a potential breach of a customer’s privacy, he said the FCA had instead introduced alternative switches.

The stir has seen limitations introduced on the use of continuous payment authorities (CPA) by payday lenders.

It means that lenders such as Wonga are no longer permitted to make more than two attempts to use a CPA to take a repayment and can no longer use a CPA to take a part-payment, as happened with Mr Sparham-Price.

Mr Wheatley said: ‘This confinement should mitigate the likelihood of lenders “clearing out” a consumer’s account, as payment will only be taken where the amount can be taken in utter.’

Wonga has not said whether it has switched any of its procedures as a direct result of Mr Sparham-Price’s death.

‘We were sorry to hear of the tragic death of Mr Sparham-Price,’ a spokesman for the company said in a statement.

‘We take our responsibilities to our customers very gravely and we have stringent lending criteria in place.

‘We conducted a total review of this case at the time to confirm we acted according to regulatory guidelines and to proceed to improve our engagement with customers.’

In February this year Wonga announced it would make a third of its total workforce redundant after it was compelled to cap its interest rates on payday loans.

TIMELINE: HOW BRITAIN’S PAYDAY LENDER SCANDAL UNFOLDED

March 2013: The UK’s fattest payday lenders are threatened with being put out of business after a damning report uncovers evidence of ‘widespread irresponsible lending’. The Office of Fair Trading’s (OFT) report is the culmination of a large-scale probe into the sector, including spot-checks on household names such as Wonga.

June 2013: The OFT refers payday lenders to the Competition Commission for a full-scale inquiry, telling it has found ‘deep-rooted’ problems. It finds some firms’ business models show up to be based around customers taking out loans which they are coerced to roll over because they cannot afford them.

August 2013: The OFT says almost half the lenders who were ordered to prove their business practices are up to scrape have thrown in the towel, with Nineteen out of 50 firms it investigated determining to call it a day.

February 2014: City regulator the Financial Conduct Authority (FCA) publishes a finalised set of rules for when it takes over supervision of the payday lending market in April, along with the rest of consumer credit. FCA chief executive Martin Wheatley says the rules will ‘give us strong fresh powers to tackle any rock-hard found to be overstepping the line’.

March 2014: Payday lenders face a fresh inquiry to see how sympathetic they are when customers fight to pay back their debts, the FCA announces. The FCA says it wants to see whether payday firms and other high-cost short-term lenders are putting too much concentrate on profits rather than consumers’ interests.

April 2014: Supervision of the entire payday lending industry passes from the OFT to the FCA. The FCA instantly starts putting its raunchy fresh rules into activity, including forcing payday firms to provide financial health warnings in emails, online and in texts and signpost people to free debt help.

June 2014: The Competition and Markets Authority (CMA) releases provisional findings from its competition investigation and says that payday loan borrowers are paying around £60 a year over the odds because of problems shopping around. It suggests setting up an independent price comparison website for payday customers.

The FCA announces that Wonga is to pay £2.6 million in compensation after pursuing fighting customers with fake legal letters in order to pressurise them into paying up. Inbetween October 2008 and November 2010, the rigid sent correspondence to about 45,000 customers in arrears from non-existent law firms menacing legal activity.

July 2014: The payday industry comes under more fresh rules overseen by the FCA. From July 1, payday firms have to include risk warnings in television advertising. They are also banned from rolling over a loan more than twice and they will only be permitted to make two unsuccessful attempts to claw money back out of a borrower’s account using a type of recurring payment known as a continuous payment authority.

The FCA proposes a cap on payday lending, meaning that from January interest and fees on fresh loans, including those flipped over, must not exceed 0.8% per day of the amount borrowed.

October 2014: Competition and Markets Authority (CMA) announces plans that will force payday lenders to sell their products through impartial comparison websites as part of a fresh clampdown by the watchdog.

November 2014: The FCA announces its fresh cap kicking off from January Two

February 2015: The Competition and Markets Authority says payday lenders will have to put their deals on comparisons sites.

The lender said it would axe 325 jobs after the Financial Conduct Authority said the interest they could charge for loans would be a maximum 100 per cent of its total cost from January Two.

Previously businesses like Wonga, Quickquid and the Moneyshop would lend petite amounts of around £50 to £3,000 for brief periods of time at rates which could run up to 6,000 per cent a year.

A typical Wonga loan used to be £150 lent over Legitimate days and a customer would then pay back £183.49 including interest and charges at an APR of Five,853 per cent.

The FCA said a cap was needed to better regulate the industry, but experts have said that the fresh cap could drown the industry entirely.

In January there was uproar when Wonga escaped prosecution for sending out fake legal letters designed to put pressure on customers who were behind on their loans.

The City of London police announced that Britain’s fattest payday lender would not face criminal charges over the scandal, despite admitting it was in the wrong.

Last June, the City watchdog announced that Wonga had agreed to pay £2.6 million in compensation for the letters which it sent to 45,000 fighting borrowers from non-existent law firms.

  • For confidential support call the Samaritans in the UK on 08457 90 90 90, visit a local Samaritans branch or click here for details.

Teenage s suicide after Wonga emptied his bank account leads for calls for tighter payday loan rules, Daily Mail Online

By Sam Tonkin For Mailonline 08:12 GMT 25 Sep 2015, updated 15:23 GMT 25 Sep 2015

Latest From MailOnline

  • Kane Sparham-Price killed himself after Wonga emptied his bank account
  • The 18-year-old was left penniless after lender took payment for his debts
  • His death prompted a coroner to call for an overhaul of payday loan rules
  • Teenager spent time in foster care and had mental health problems
  • Wonga said it was sorry to hear of the tragedy but acted within guidelines

A coroner has called for a switch to payday loan rules after a disabled teenager killed himself on the same day Wonga left him penniless after emptying his bank account.

Kane Sparham-Price, Legal, from Ashton-under-Lyne, Greater Manchester, hanged himself after the loans company took payment for his debts under the terms he had agreed to.

After finding that the teenager had taken his own life, South Manchester Coroner John Pollard voiced concerns that there may be similar deaths in the future unless switches were made.

He wrote to the Financial Conduct Authority (FCA) in September last year, following the inquest into Mr Sparham-Price’s death, but details of the inquest have only just emerged in the media after being reported by Disability News Service.

Related Articles

In a report sent to the FCA, Mr Pollard said: ‘He was left with no money in his account and no means of borrowing any more.

‘Whilst I accept that the various payday lenders are legally entitled to “clear out” someone’s bank account if money is owing to them, it struck me that there ought to be a statutory minimum amount which must be left in an account (say £10) to avoid absolute destitution.’

He added: ‘As I understand you set and regulate the rules, you might look at this with a view to preventing further deaths.’

The inquest had been told that Mr Sparham-Price, who died in February 2013, had ‘numerous problems including those connected with his mental health’, and spent much of his life in foster care and care homes.

Shortly before his death he posted on Facebook, writing how he was looking forward to moving into a fresh plane and waiting for a deposit to be arranged.

There is no suggestion Wonga acted unlawfully or that the lender was aware it had left Mr Sparham-Price with no money in his bank account.

The teenager began taking out an unspecified number of loans from Wonga when he turned Legal and left local authority care.

In its response to Mr Pollard’s report, published last October, the financial watchdog’s chief executive Martin Wheatley said that introducing the kind of ‘absolute destitution’ rule suggested by the coroner would be ‘undesirable’.

After providing a number of reasons why it would be unlikely to work, including a potential breach of a customer’s privacy, he said the FCA had instead introduced alternative switches.

The budge has seen limitations introduced on the use of continuous payment authorities (CPA) by payday lenders.

It means that lenders such as Wonga are no longer permitted to make more than two attempts to use a CPA to take a repayment and can no longer use a CPA to take a part-payment, as happened with Mr Sparham-Price.

Mr Wheatley said: ‘This confinement should mitigate the likelihood of lenders “clearing out” a consumer’s account, as payment will only be taken where the amount can be taken in total.’

Wonga has not said whether it has switched any of its procedures as a direct result of Mr Sparham-Price’s death.

‘We were sorry to hear of the tragic death of Mr Sparham-Price,’ a spokesman for the company said in a statement.

‘We take our responsibilities to our customers very earnestly and we have rigorous lending criteria in place.

‘We conducted a total review of this case at the time to confirm we acted according to regulatory guidelines and to proceed to improve our engagement with customers.’

In February this year Wonga announced it would make a third of its total workforce redundant after it was coerced to cap its interest rates on payday loans.

TIMELINE: HOW BRITAIN’S PAYDAY LENDER SCANDAL UNFOLDED

March 2013: The UK’s largest payday lenders are threatened with being put out of business after a damning report uncovers evidence of ‘widespread irresponsible lending’. The Office of Fair Trading’s (OFT) report is the culmination of a large-scale probe into the sector, including spot-checks on household names such as Wonga.

June 2013: The OFT refers payday lenders to the Competition Commission for a full-scale inquiry, telling it has found ‘deep-rooted’ problems. It finds some firms’ business models show up to be based around customers taking out loans which they are coerced to roll over because they cannot afford them.

August 2013: The OFT says almost half the lenders who were ordered to prove their business practices are up to scrape have thrown in the towel, with Nineteen out of 50 firms it investigated determining to call it a day.

February 2014: City regulator the Financial Conduct Authority (FCA) publishes a finalised set of rules for when it takes over supervision of the payday lending market in April, along with the rest of consumer credit. FCA chief executive Martin Wheatley says the rules will ‘give us strong fresh powers to tackle any stiff found to be overstepping the line’.

March 2014: Payday lenders face a fresh inquiry to see how sympathetic they are when customers fight to pay back their debts, the FCA announces. The FCA says it wants to see whether payday firms and other high-cost short-term lenders are putting too much concentrate on profits rather than consumers’ interests.

April 2014: Supervision of the entire payday lending industry passes from the OFT to the FCA. The FCA instantly starts putting its harsh fresh rules into act, including forcing payday firms to provide financial health warnings in emails, online and in texts and signpost people to free debt help.

June 2014: The Competition and Markets Authority (CMA) releases provisional findings from its competition investigation and says that payday loan borrowers are paying around £60 a year over the odds because of problems shopping around. It suggests setting up an independent price comparison website for payday customers.

The FCA announces that Wonga is to pay £2.6 million in compensation after pursuing fighting customers with fake legal letters in order to pressurise them into paying up. Inbetween October 2008 and November 2010, the rock-hard sent correspondence to about 45,000 customers in arrears from non-existent law firms menacing legal activity.

July 2014: The payday industry comes under more fresh rules overseen by the FCA. From July 1, payday firms have to include risk warnings in television advertising. They are also banned from rolling over a loan more than twice and they will only be permitted to make two unsuccessful attempts to claw money back out of a borrower’s account using a type of recurring payment known as a continuous payment authority.

The FCA proposes a cap on payday lending, meaning that from January interest and fees on fresh loans, including those flipped over, must not exceed 0.8% per day of the amount borrowed.

October 2014: Competition and Markets Authority (CMA) announces plans that will force payday lenders to sell their products through impartial comparison websites as part of a fresh clampdown by the watchdog.

November 2014: The FCA announces its fresh cap kicking off from January Two

February 2015: The Competition and Markets Authority says payday lenders will have to put their deals on comparisons sites.

The lender said it would axe 325 jobs after the Financial Conduct Authority said the interest they could charge for loans would be a maximum 100 per cent of its total cost from January Two.

Previously businesses like Wonga, Quickquid and the Moneyshop would lend puny amounts of around £50 to £3,000 for brief periods of time at rates which could run up to 6,000 per cent a year.

A typical Wonga loan used to be £150 lent over Eighteen days and a customer would then pay back £183.49 including interest and charges at an APR of Five,853 per cent.

The FCA said a cap was needed to better regulate the industry, but experts have said that the fresh cap could bury the industry totally.

In January there was uproar when Wonga escaped prosecution for sending out fake legal letters designed to put pressure on customers who were behind on their loans.

The City of London police announced that Britain’s largest payday lender would not face criminal charges over the scandal, despite admitting it was in the wrong.

Last June, the City watchdog announced that Wonga had agreed to pay £2.6 million in compensation for the letters which it sent to 45,000 fighting borrowers from non-existent law firms.

  • For confidential support call the Samaritans in the UK on 08457 90 90 90, visit a local Samaritans branch or click here for details.

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