Payday lenders fail to warn against rollovers
30 September, 2014
category: Short Term, Unsecured
Just one in five payday loan customers are made aware of the risks of extending loans, Citizens Advice research has revealed.
Of customers struggling to repay loans one in five had their interest frozen while just a quarter thought the lender treaded them sympathetically between 1 April and 31 August 2014.
One in eight Citizens Advice clients has a payday loan, while debts average £1,000 often spread across several loans.
Gillian Guy, chief executive of Citizens Advice, said: “Payday lenders are still not sticking to their word to treat people fairly.
“While things are moving in the right direction, some payday lenders are still falling far short of responsible lending.
“Customers need to have the full facts at their finger-tips when making decisions about borrowing.
“Irresponsible behaviour including a lack of proper checks to see if people can afford to pay back loans and pressurising borrowers into extending loans has pushed people deep into debt.”
Some payday lenders have improved slightly, as half of customers said they were asked about their personal finances between April and August 2013 compared to four in 10 annually to November 2013.
Guy added: “The FCA needs to use enforcement action make sure firms flouting the rules are not allowed to operate.
“As people continue to struggle to make ends meet, the demand for short-term credit won’t go away. That’s why, as well as a cleaner market, people need more choice.
“Increasing the number of credit unions is part of that, but so too is banks stepping up to the plate by offering a responsible micro-loan.”