Which? calling for credit crackdown

lewis92

Consumer campaigners are calling for a crackdown to clean up the “irresponsible” credit industry after finding that a quarter of people who take out expensive payday loans are using them to plug other debts.

Which? said that “desperate” borrowers who find themselves locked out of mainstream credit are drowning in a vicious cycle of high-cost loans as they try to meet their daily living costs.

It found that 24% of people who said they take out payday loans were using the cash to try and pay down other debts they had taken out.

The consumer group said that half of people who used a form of high-cost credit such as a payday loan or unauthorised overdraft said that they had been rejected for credit within the past year.

Of the credit users Which? surveyed, the vast majority (78%) had credit cards while a third had authorised overdrafts and one in six had a personal loan. One in 16 credit users used payday loans and one in 20 had dipped into an unauthorised overdraft.

Which? said that some households are becoming increasingly reliant on loans just to get by and more than half (57%) of people who had credit-card debt were using their card to cover essentials such as rent and household bills.

The consumer body called on the Government to make sure that new financial watchdog the Financial Conduct Authority (FCA), which will regulate credit from next year, takes “early and tough action”.

Which? said the FCA should ban lenders from imposing excessive default fees and charges, toughen up on rules to make sure proper affordability checks are carried out and end unsolicited increases to people’s credit limits by firms.

The FCA should also limit the number of times that high-cost loans can be rolled over, force firms to make fees and charges more transparent and step in quickly when borrowers are struggling, Which? said.

Which? executive director Richard Lloyd said: “For an increasing number of people, using credit to pay for essentials has become the norm. This has led to people being forced into a vicious cycle, taking out further, expensive credit to pay off existing debts.”

http://politicsuk.eu/which-calling-for-credit-crackdown/


What do you think ? Are pay day loans really that bad ?

I know some bank overdrafts have very high charges which are equal to shady loan comapnies

dalesrider

Which? executive director Richard Lloyd said: “For an increasing number of people, using credit to pay for essentials has become the norm. This has led to people being forced into a vicious cycle, taking out further, expensive credit to pay off existing debts.”

Sorry.... But who is forcing these people to take out these loans.:mad:
If people are living beyond their means, then that is a issue they need to face upto. NOT BLAME payday loan co's, because they get deeper and deeper into a mess.

One good thing I did hear.
Was that they want loans to have have much by £ per 30 days they cost.
Which to Jo Public is far better than APR.
I just wonder how much leaving a £11 debit on a Halifax acc or anyother that costs £1 a day, for a year would cost, in APR terms, compared to a payday loan.


But the way Which pride themselves as a conumser champion... Yet charge people anything from £1 to £19.99 a month for the self same book :rotfl:

droiderm

I think the general point is, is these people are considered too risky for main stream credit. There is probably a reason for that.

The implication will be, that people can postpone facing the underlying issue. The problem with PDLs is, they are allowing people to postpone the issue , and make the problem significantly worse.

So I think your point is kind of correct, but PDL's tightning up their criteria would achieve what you want.

fermi

MSE News Article: Which? wants payday loans clampdown

And ---> Discussion thread