Debt charity calls for tighter regulations on payday lenders
A debt charity is calling for tighter regulations to protect vulnerable people from rogue payday lenders.
New findings from debt counsellors Christians Against Poverty show four out of five (78%) people taking out a payday loan did so to afford food.
Worse still, one in five people weren’t even asked if they had a job.
Chief executive Matt Barlow said: “This evidence shows that people taking out payday loans are not, typically, doing cosy house repairs as most payday lenders would have us believe. People who take out this expensive sort of credit are hungry, worried about keeping warm and becoming homeless.
“Some elements of the industry have worked hard to improve their
practices and we warmly welcome that but these findings show irresponsible lending still looms large and those companies
give the better firms a very bad name.”
More than 1,500 of CAP’s clients were asked if they had taken out a payday loan and if so, how many. More than half had taken out between two and five loans before they called CAP for free debt help.
A further 16 % admitted they had “lost count” of how many payday loans they had used.
Barlow said: “We try hard to take a balanced view, being fair to both our clients and the credit industry. Therefore we shall be taking this report to individual companies and the Consumer Finance Association with the expectation that they will want to engage with us.
“We want to see regulations that insist on appropriate affordability checks including a mandatory sign up to a credit reference company which will work in real
time, to stop people taking out multiple loans on t he same day or living a payday loan lifestyle, paying one off with another.
“Thankfully there are companies who are leading the way in responsible lending and we want to see this best practice spread to the smaller names and the overseas operations who seem all too happy to operate
outside of the OFT’s guidleines."
This article was taken from Charity Times: http://www.charitytimes.com/ct/debt_charity_calls_for_tighter_regulations_on_payday_lenders.php