A Word from UCLA
This year marked 15 years since the Utah Consumer Lending Association was organized. In my time serving as president, it has been a rewarding experience working with legislators and the Department of Financial Institutions to provide valued access to short-term credit for Utahns while bolstering consumer safeguards.
We are always concerned that increased regulation, such as a payday loan database, will force many consumers to use out-of-state and off-shore Internet lenders. These unregulated services do not provide the strong consumer safeguards contained in state law and supervised by the DFI. Also, the government database may compel Utahns to turn to more expensive alternatives, such as overdraft protection programs.
Please remember that the third-party credit check programs deferred deposit lenders utilize perform the real analysis needed: determining a borrower’s ability to repay.
This year saw just nine complaints registered for the entire cash advance industry in Utah, all of which were resolved in a matter satisfactory to the DFI. When one considers the hundreds of thousands of transactions completed throughout the state, this figure becomes even more impressive and underscores how consumers are overwhelmingly satisfied with their deferred deposit (i.e. payday) experiences.
In the 2014 Legislative Session, additional consumer safeguards were enacted to protect borrowers as they apply for and receive small-dollar loans. These included requiring lenders to determine a customer’s ability to repay and mandatory enrollment in an interest-free payment plan after 70 days.
Our association, working with lawmakers and regulators, has developed a nationally recognized framework that achieves the appropriate balance of legislative oversight and open market competitiveness. No other financial services industry is required to provide customers an interest-free loan upon demand (a reform initiated and sponsored by the Association). These facts are important for the legislature to remember when considering additional requirements.
Ultimately, we respect the legislative process and look forward to continuing to work with legislators to strike the best possible balance between consumer safeguards and providing valued access to credit when Utahns need it most.
President, Utah Consumer Lending Association