StepChange Debt Charity responds to BIS and FCA payday loan announcements
24 March, 2014
Following the release of the Department for Business, Innovation and Skills (BIS) and Financial Conduct Authority (FCA) responses to the BIS Select Committee report on payday loans, StepChange Debt Charity’s head of policy Peter Tutton said:
“Today’s announcements show that both government and the regulator understand the deep-seated problems associated with payday loans. The payday loan sector is plainly not always working in the best interests of consumers. Last year we saw an 82 percent increase in the numbers of people seeking our help with payday loan debts.
“The introduction of a real-time data sharing regime should be an essential part of the FCA’s strategy to fix the payday lending markets. Such a system is crucial for better affordability checking, it would ensure that lenders are fully aware of borrowers existing commitments and would prevent people from accessing multiple loans. In addition the FCA should use its powers to ensure that debts are not inflated through the addition of excessive interest and charges.
“While the government and regulator have made clear they understand the central problems with the payday loan market, until we see noticeable improvements we will continue to highlight the problems we see and to make the case for reform.”
Facts and figures
- StepChange Debt Charity helped 66,557 people with payday loan debts in 2013, up from 36,413 in 2012, an increase of 82 percent
- In 2013 the charity handled £110m worth of payday loan debt up from £60m in 2012
- The average total payday loan debt of a StepChange Debt Charity client was £1,647 (owed on three payday loans), more than the average client’s monthly net income of £1,381