StepChange Debt Charity response to Competition and Markets Authority (CMA) payday loan proposals
9 October 2014
In response to the CMA’s proposals, Peter Tutton, head of policy at StepChange Debt Charity said:
"Today’s proposals are another step towards bringing this dysfunctional market under control. Payday loans have been promoted as a means to deal with short-term financial difficulties, but the reality is they often trap financially vulnerable people into expensive and harmful cycles of unmanageable debt.
"The CMA finds that the lack of real-time data sharing harms competition, it also harms borrowers. We continue to see the damage caused by borrowers coping with the burden of multiple payday loans.Too often firms are unaware of whether people have existing payday loans with other lenders and then compound financial difficulties by offering further loans. We urge the Financial Conduct Authority to mandate a system of real-time data sharing.
"We welcome the CMA's recommendation for a wider review of the lead generation market. Financially vulnerable people need clear and transparent information on what services they are accessing, not to be misled by firms who look like lenders but sell their personal information on.We see the results in people being bombarded by calls and texts offering payday loans, fee-charging debt management services and other potentially risky financial products and services."