Payday loan firms bombarding financially vulnerable customers
22 July, 2014
Indebted consumers are being bombarded with unsolicited marketing calls offering payday loans, according to new findings from StepChange Debt Charity.
A survey of people contacting the charity’s helpline found that 32 percent were receiving such calls. Those receiving these offers of high-cost credit are receiving an average of 10 per week.
Fifteen percent of those receiving these messages went on to take out payday loans; the average amount of borrowing taken out as a direct result of these calls stood at £980, with one or more lenders. The charity is concerned that these additional loans will almost certainly lead to further financial difficulty.
According to the charity the findings highlight two key issues:
- Weak data protection regime - StepChange Debt Charity believes that a weak data protection regime has allowed a market to flourish in which personal information is obtained, sold and used to market to financially vulnerable consumers.
- Regulatory gap - Under existing rules, the promotion of mortgages in this way is banned and the charity believes that the same stringent rules should apply to payday lenders. The charity is calling on the Financial Conduct Authority to close the regulatory gap that allows for the “unsolicited real-time promotion” of high-risk credit products including payday loans.
Mike O’Connor, Chief Executive of StepChange Debt Charity, said:
“These findings show that nuisance marketing calls can be harmful and push financially vulnerable consumers deeper in the downward spiral of unsustainable borrowing.
“For those in financial difficulty, the offer of an easy, no-questions asked loan can seem like a financial lifeline. The reality is that it can be a financial noose around the neck of vulnerable people and their families. We need action from the FCA to ensure that unscrupulous firms can no longer exploit people’s financial troubles in this way.”
The findings are released as part of the charity’s ongoing Got their number campaign highlighting the harm that can stem from nuisance calls.