A new campaign calling for a regulatory crackdown on the payday lending industry was launched by consumer groups, debt campaigners, and MPs on Tuesday.
Consumers across the UK are being urged to register for the Charter to Stop the Payday Loan Rip-Off, which calls for the government to take a strong stance against the £2 billion per year payday loan industry.
The charter has been launched by some of Britain’s largest consumer, debt, and anti-poverty organisations, such as Citizen’s Advice, Which?, the Centre for Responsible Credit, Church Action on Poverty, and the StepChange Debt Charity.
Peter Tutton, StepChange’s head of policy, stated, “Payday loans are driving an increasing number of people towards acute repayment difficulties. He continued by saying, “effective regulation is long overdue.”
According to Tutton, the charity was contacted by over 30,000 individuals seeking help with their downward-spiraling payday loans in the first half of 2018, which is nearly the same amount of requests received in all of 2012.
He warned, “This is a dangerous market for consumers and effective regulation is long overdue.” To gather support, an e-petition was launched at Change.org, the charity’s website.
Short-term lenders, which are able to charge exorbitant annual interest rates of 5,000 per cent or more, will begin being regulated by the Financial Conduct Authority in April 2018.
The FCA recently developed new rules for the payday lending sector, including limiting the number of times a lender is allowed to attempt to recover debt payments from a borrower’s bank account and the number of times a short-term loan can be offered to the same individual.
However, debt campaigners do not believe the rules go far enough, and they are calling for improved affordability checks, advertising crackdowns governing what kind of promotions can be shown, and access to real-time data to allow lenders to check if a borrower has other loans already outstanding. Additionally, they are also pushing for restrictions on the charges applied by lenders.
According to MP Paul Blomfield, the FCA’s proposed regulations are a definite step in the right direction, but they do not go quite far enough. He is urging MPs, charities, councils, and the general public to back the Charter and unite in the call for improved regulation and enforcement.
Blomfield calls this a “once in a generation opportunity,” and he appears to be adamant in his belief that without it, lenders will be able to continue exploiting people across the UK.