ERS who secure debts against vehicles too often treat customers poorly and fail to carry out basic affordability checks, the Financial Conduct Authority (FCA) said yesterday.
Logbook loans range from £500 to £50,000 and typically come with an annual percentage rate of 400 per cent.
The regulator has been responsible for the sector since the start of April and has been reviewing it for the past two months. Lenders that do not improve their behaviour face being refused a licence to operate.
“People who use logbook loans are often in difficult circumstances with few other borrowing options,” said the FCA’s Christopher Woolard. “The last thing that should be happening is for them to be squeezed yet more or even threatened, but that is what our research has found.”