08 October 2013
Payday loans concern CAP
by Amanda Pilz
Alliance member and debt charity Christians Against poverty (CAP) is calling for tighter regulations to protect vulnerable people from rogue payday lenders.
Shocking new findings from CAP show four out of five (78 per cent) people taking out a payday loan did so to afford food. Worse still, one in five people weren't even asked if they had a job or regular outgoings.
Christians against Poverty chief executive, Matt Barlow, said: "This evidence shows that people taking out payday loans are not, typically, doing cosy house repairs as most payday lenders would have us believe. People who take out this expensive sort of credit are hungry and worried about keeping warm and becoming homeless.
"Some elements of the industry have worked hard to improve their practices - and we warmly welcome that - but these findings show irresponsible lending still looms large and those companies give the better firms a very bad name."
More than 1,500 of CAP's clients were asked if they had taken out a payday loan and if so, how many. More than half had taken out between two and five loans before they called CAP for free debt help.
A further 16 per cent admitted they had 'lost count' of how many payday loans they had used.
Barlow continued: "We try hard to take a balanced view, being fair to both our clients and the credit industry.
"We want to see regulations that insist on appropriate affordability checks, including a mandatory sign-up to a credit reference company which will work in real-time, to stop people taking out multiple loans on the same day or living a payday loan lifestyle, paying one off with another.
"Thankfully there are companies who are leading the way in responsible lending and we want to see this best practice spread to the smaller names and the overseas operations who seem all-too-happy to operate outside of the OFT's guidelines."
More than 1,500 of CAP's clients responded to the charity's survey
Regarding loans, 22 per cent said they had taken out a payday loan before getting debt help, 51 per cent admitted to taking out more than one payday loan and 78 per cent said the loan was for food shopping.
www.capuk.org For debt help: call 08003280006