Regions to Lower Cost of Payday Loans
Berry, Kate, American Banker
Byline: Kate Berry
Facing criticism from consumer groups for its payday-loan fees, Regions Financial (RF) is taking steps to make the loans cheaper for consumers.
Spokeswoman Evelyn Mitchell said Wednesday that the Birmingham, Ala., company is planning to reduce its fees and lengthen the repayment period on its Ready Advance loan, which it rolled in 2011 as a service for its customers that had been using payday lenders. Mitchell added that the planned changes are in response to customer feedback, not criticism from consumer groups.
"We have been surveying our customers and listening to them and we are in the process of making some enhancements," Mitchell said. She did not give specifics on the size of the fee reduction or adjustments to the repayment period, nor did she say when the changes would be made.
The $121 billion-asset Regions offers the loans in 16 states, including North Carolina, a state that has essentially banned payday lending. The Charlotte Observer reported this week that North Carolina Attorney General Roy Cooper is looking for a way to force Regions to stop making loans in the state, though he has not yet taken any action.
Traditional payday lenders largely exited North Carolina in 2006 after the state banking commissioner ruled that the loans, made largely through partnerships between banks and payday lenders, violated state usury laws. At issue now is whether Regions is using its out-of-state charter to get around its rate caps, Cooper told the Charlotte paper.
"We do not want North Carolina consumers subjected to payday loans," Cooper said. "Payday loans are like a consumer needing a life preserver being thrown an anvil. It gets them on a debt treadmill, oftentimes."
Noelle Talley, a spokeswoman for the North Carolina Department of Justice, said the agency has "serious concerns about the product."
"The issue has been raised to us by advocacy groups and the state banking commissioner and we will seek more information from the bank," she said. …