11 June, 2014
Following the release of the Competition and Markets Authority (CMA)’s review of the payday loan industry, Mike O’Connor, Chief Executive of StepChange Debt Charity, said:
“Today’s findings show that the payday lending market consistently fails consumers. Payday loans are supposed to serve as one off short term loans, but with customers taking out an average of six per year, it is clear that this is a market that traps people in unsustainable cycles of unaffordable repeat borrowing.
“The failure of the payday loans companies to compete for customers adds insult to the injury of people paying extortionate prices.
“The payday lending industry continues to be beset with problems. Irresponsible lending remains chief among those problems, and is exacerbated by lenders who have no knowledge of whether customers have existing payday loans with other providers. This is why we firmly believe the Financial Conduct Authority should mandate a system of real-time data sharing to ensure that vulnerable consumers cannot access unaffordable multiple loans.
“The CMA’s own evidence shows that people are using payday loans to pay for essential household bills. Our experience shows us that credit and especially high-cost credit are rarely the answer to financial problems. We need to ensure that people in financial difficulty have access to credible alternatives and that they are not driven deeper into debt with payday loans.”