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MSE News: Payday lenders risk 'grooming new generation' into debt, Martin Lewis says



  • tinkerbell28
    tinkerbell28 Posts: 2,720 Forumite
    Yeah yeah yeah.

    I distinctly remember in boom times, the likes of picture, purple, first plus, etc.

    All with celeb endorsements encouraging people to release the equity. Extension, Disneyland, car, tv, redecorate, release the money all tied up in the house.

    The adverts were on all the time, I was on maternity leave for most of the boom time so remember them well, as I thought this is gonna cause problems.

    I don't believe due to manipulation (HTB) we've seen how far people are affected yet. But lots are discovering they've in effect got a very expensive 2nd mortgage.....

    How is it even legal.....how could people sign us up to this....wahhhh wahhhh.

    Unless financial education improves and people start accepting personal responsibility, instead of relying in everyone else to look after them.

    You'll always have people sign up to stuff like this. It was secured loans, then it was gold sellers, now it's PDL. Soon it will go full circle and be mainstream banks again....until the next time....
  • matttye
    matttye Posts: 4,828 Forumite
    First Anniversary First Post Combo Breaker Debt-free and Proud!
    JuicyJesus wrote: »
    Tell you what, here's a simple list of regulations to TV and other advertising for PDLs which would actually make sense and immediately put a stop to some of the worst practises:
    1. Advertisements for payday loans must not be broadcast in peak hours or during the broadcast of programming aimed chiefly or solely at those too young to take out a payday loan themselves.
    2. Advertisements for payday loans must position themselves solely as a lender for emergency priority spending and must not encourage their use for any form of discretionary spending or for any form of non-specific spending (e.g. “a few extra pounds before payday”.)
    3. Payday loans must be portrayed solely as a service of last resort. Comparisons between payday loan services and mainstream facilities offered by banks and building societies, such as but not restricted to overdrafts or credit cards, must not be offered.
    4. In addition to the APR (annual percentage rate) required to be displayed by law, in equal sized and typefaced lettering to the APR the advert must also display the cost in interest of borrowing a nominal sum of £100 for 14 days.
    5. The advertisement must bear the following risk warning in such a way that it is visible, legible and not obscured in any way:“Payday loans are a serious financial commitment and should not be taken out unless you will be fully able to repay the loan on the due date specified without causing yourself hardship. Failure to repay will lead to damage to your credit rating; use of payday loans may be viewed negatively by other lenders.”

    2. Is quite an important one. There's one particular PDL where some girl boasts about going on holiday with the help of a PDL.

    It doesn't mention how much she borrowed and how much she paid back, just shows a happy girl who's been on holiday. I suspect that most people who used a PDL to go on a foreign holiday would be completely miserable once they got back and had to repay!
    What will your verse be?

    R.I.P Robin Williams.
  • Mobeer
    Mobeer Posts: 1,851 Forumite
    Academoney Grad First Anniversary Photogenic First Post
    Criticsm of pay-day lenders seems fair, but to say "I think we'd all be a lot better off without them" seems extreme. Pay-day lenders have their flaws but they are far better than loan sharks.

    Bet Wonga never do this:
  • Scotjock
    As an employee of one of the retail banks I can tell you the biggest issue with the PDL is multiple loans from the various lenders this is what causes so much chaos to customers bank accounts.
    A way to stop this to me is the first and most important step that needs to happen.
  • CFC
    CFC Posts: 3,119 Forumite
    Exactly, Mobeer. I subscribe to the theory that all adults frankly have a choice. Nobody makes them sign up to anything.

    Payday loans cater to the desperate. I'm not sure how cutting off that legitmate lending option is necessarily helpful, anyway.
  • mo786uk
    mo786uk Posts: 1,379 Forumite
    One of the problems from an affordability perspective and a difficulty for the regulator I imagine is that its all well and good criticising a PDL for lending to someone who has 3 other PDL - but has the borrower always been accurate with their debt levels?

    Yes the PDL should carry out assessments but the debtor needs to take some of the blame if they have misled the PDL.
  • Sinhanada
    Casing point, so you couldn't afford it. Your at stepchange. I fallen into the trap myself, except my loans were taken under the influence of alcohol/drugs and spent in the bookies before I even had time to sober up.

    I should never have been able to get access to cash in that state, but there was nothing stopping me from doing so.

    Actually you're right - I could afford it, just not the lifestyle I was living under. I know I have made a lot of changes and the biggest one is that if I can't afford it cash, then it doesn't get bought. Simple.

    In that aspect, a 15 minute transfer window is too quick - make it at least 24hrs before the payment is authorised and made would be a sensible suggestion.
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