Citizens Advice has revealed that payday loan customers who are struggling to repay their loan are not having the interest rates frozen, aren’t warned about the cost of extending the loan and aren’t being told about free debt advice, despite promises from lenders to do so.

New figures out today reveal people struggled to repay their loan in four out of five cases reported to Citizens Advice since 3 October 2013.

Evidence from Citizens Advice finds that, despite promises made 16 months ago by payday lenders to treat their customers fairly, those in acute financial difficulty are still bearing the brunt of the industry’s failings. Of the 807 cases where people struggled to repay:

• 86% did not have the interest or charges on their loan frozen;
• 4 in 5 were not treated with sympathy;
• a third were put under pressure to extend the loan;
• 84% were not told the risks of extending the loan;
• 9 in 10 said there weren’t any checks made when extending the loan;
• Two thirds (64%) were not told about the cost of extending the loan;
• 9 in 10 were not told about free debt advice.

The data is from an analysis of feedback on 1,016 loans reported to the Citizens Advice payday loan tracker between 3 October 2013 – when the FCA announced its proposed rules for payday lenders – and 20 March 2014. The findings come just days before the FCA is due to take over responsibility for regulating the whole of the consumer credit market on 1 April.

The new evidence also reveals customers are not being given the necessary information about Continuous Payment Authorities (CPAs) – the method many lenders use to collect repayments.

In 359 cases where the borrower knew they were repaying the loan through a CPA, it was not explained how CPAs work in three in four loans, 92% were not told how to cancel and half didn’t get a three-day reminder that a payment would be taken, as promised by the lender.

Citizens Advice Chief Executive Gillian Guy said: “A payday loan has become a debt sentence for many of our clients due to irresponsible practices by lenders. Consumers who are looking for a bit of money to tide them over need a fair and competitive market to engage with not one that seeks to exploit them. The stern warning and tough rules from the FCA need to be followed with strong enforcement action. Lenders found to breaking the rules and harming consumers should be immediately thrown out of the market.

“Citizens Advice continues to deal with people on a daily basis who have been driven deep into debt because of payday lenders’ harmful behaviour. The FCA listened to the problems our clients have had with payday lenders and acted on our advice, including introducing rules to make sure proper checks are made to assess whether the borrower can afford to repay. It’s important the FCA doesn’t pull any punches with payday lenders and delivers on its commitment to ensure a fair market for all consumers.”

Last month Citizens Advice reported seven payday loan adverts to the Advertising Standards Authority over concerns about irresponsible advertising. As part of the regulatory changes, the payday lending industry will be subject to the FCA’s powers to ban adverts including those that contain misleading headline claims, unfair or unrealistic impression of the product or a lack of prominence given to key risks.