A straightforward, quick way to take on payday lenders is for banks to offer personal micro-loans, Citizens Advice has said as Labour leader Ed Miliband announces long term plans to boost funding for credit unions.
Citizens Advice chief executive Gillian Guy said: “The proliferation of payday loans is a symptom of the squeeze on living standards. There is a clear demand for short-term credit and, while boosting credit union services could offer some help in the long term, consumers need more choice now.
“High street banks have been let off the hook by the lack of pressure on them to enter the short-term credit market. Banks need to offer a responsible alternative to payday loans like an affordable personal micro-loan.
“Citizens Advice Bureaux see the hardship caused by payday loans on a daily basis. Some people are being given loans without proper assessments as to whether they can pay them back. Many see debts balloon as their loans are rolled over and others find their bank accounts empty after the misuse of continuous payment authorities.
“At the British Bankers’ Association’s international conference today I will be talking to banks about how they should be more innovative in the services they offer. This includes entering into the short-term credit market and looking at ways they can help people save money on the things they buy.”