CSAT Launches Accountability Program to Give Texas Consumers Greater Confidence in Small, Short-Term Lenders
AUSTIN, Texas, Sept. 12, 2012 /PRNewswire-USNewswire/ — The Consumer Service Alliance of Texas (CSAT), a trade association representing the interests of consumers and Credit Access Businesses (CABs), today announced details of a new program that will enhance accountability and confidence in Texas‘ small, short-term loan industry.
CSAT members unanimously embraced the new, vigorous oversight plan, along with expanded Best Practice guidelines, to enhance consumer protection. CSAT’s Best Practices are designed to solve limitations applied in recent municipal ordinances while remaining consistent with detailed negotiations that took place during the last legislative session.
The expanded Best Practice guidelines include no cost extended payment plans, transaction limits and mandatory fee reductions with the refinance of single payment auto title loans. These changes went into effect statewide on August 15.
“These new accountability measures build on CSAT’s long-standing commitment to financial choice and a history of self-regulation that works properly and fairly for consumers, lenders and the wider community,” CSAT President Alex Vaughn said.
“Most important, every loan customer – regardless of the type of loan obtained – will be put on a path to full repayment in a time certain, or in a no cost extended payment plan that will fully repay their debt,” Vaughn said.
In addition to the updated Best Practice guidelines, CSAT will implement four new action items aimed addressing compliance: 1) annual confirmation by companies adhering to Best Practices; 2) mid-year self-assessment by member companies to certify compliance; and 3) periodic external audits conducted by an independent outside firm.
From stores in neighborhoods across the Lone Star State, small, short-term lenders guarantee hard-working Texans access to small, short-term loans; money orders; pre-paid telephone and debit cards and other services to help them manage their finances.
In 2011, Texas lawmakers gave the Texas Finance Commission and the Office of the Consumer Credit Commissioner (OCCC) comprehensive licensing, examination, and enforcement authority over CABs. This legislation established a rigorous system of checks and balances to protect small loan borrowers while preserving access to credit and consumer choice.
However, Senate Business and Commerce Committee Chairman John Carona said, “There was clearly unfinished business left over from the 2011 legislative session. Those of us who focused closely on the issue strongly encouraged the industry to proactively address cycle of debt concerns. Implementing these safeguards statewide before the Legislature convenes in 2013 will benefit consumers. The industry did what we asked them to do and we will finish the job next year.”
The Finance Commission and OCCC officials will continue to exercise close oversight of the industry, making additional legislative recommendations, when appropriate. Their review of consumer complaints, CAB quarterly data, and on site examinations, could also lead to corrective action against any CAB found to be in violation of Texas law.
“Transparency and choice are essential in building trust between small, short-term lenders, their customers, and the community at large,” Consumer Credit Commissioner Leslie Pettijohn said. “The self-regulatory initiative launched today puts some important tools in place to limit over-borrowing and help Texans who are behind on their payments avoid a cycle of debt.”
Recently, Finance Commission members passed a resolution supporting the uniformity of laws governing credit access businesses and encouraging the Legislature to take appropriate steps to clarify its intent with regard to the statewide application of consistent rules to eliminate consumer confusion, disparate treatment and the potential of additional costs.
“CSAT deserve kudos for helping Texas consumers understand they have choices, and can exercise those options, when taking out a short-term loan to make ends meet,” said Bill Hammond, president and CEO of the Texas Association of Business. “We admire the work companies are doing to foster compliance and accountability across the industry.”
The Consumer Service Alliance of Texas (CSAT) is a trade association that advocates the protection of financial choice based on informed decision-making and personal responsibility for Texas consumers. CSAT represents the interests of consumers and Credit Service Organizations (CABs) across Texas. For more information, visit CSAT’s Web site at www.consumerserviceallianceoftexas.org.
SOURCE Consumer Service Alliance of Texas (CSAT)