Payday lenders must address widespread failings
April 8, 2013
StepChange Debt Charity believes today’s announcement by Ed Miliband concerning the proliferation of payday lenders on Britain’s high streets should serve as yet another warning to the industry that it must take action to prove that it is committed to responsible lending and the protection of financially vulnerable consumers.
The charity has raised concerns about widespread failings within the payday lending sector that often leave people trapped in a vicious cycle of dependency on high cost credit. The charity believes regulators must take prompt and forceful action if these are not addressed in the near future:
- Rising balances - the average payday loan debt of a StepChange Debt Charity client now stands at £1,657, up from £1,138 in 2009.
- Multiple payday debts – last year, 7,221 of the charity’s clients held five or more payday loans, this number stood at just 716 in 2009.
- Misuse of Continuous Payment Authority (CPA) – the charity often sees funds withdrawn from consumers' accounts without consent.
- Aggressive collection practices – StepChange Debt Charity clients are regularly subjected to threatening and harassing actions by payday lenders.
StepChange Debt Charity’s director of external affairs Delroy Corinaldi said: “The ever increasing number of payday lenders on our high streets is a sad reflection of the broader economic climate. Payday lending is not however limited to the high street.
“StepChange Debt Charity has seen numerous instances in which payday lenders from across the sector, including online and telephone providers, have continued to lend to customers with existing payday loan debts, forcing people into an unsustainable cycle of borrowing.
“We continue to work with payday lenders and their trade bodies in order to ensure that customers are treated fairly. The payday sector must do more to protect financially vulnerable people and ensure that it is fit for purpose ahead of the new regulatory regime.”