Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • Former MSE Helen
    • By Former MSE Helen 5th Nov 13, 12:39 PM
    • 2,324Posts
    • 971Thanks
    Former MSE Helen
    MSE News: Payday lenders risk 'grooming new generation' into debt, Martin Lewis says
    • #1
    • 5th Nov 13, 12:39 PM
    MSE News: Payday lenders risk 'grooming new generation' into debt, Martin Lewis says 5th Nov 13 at 12:39 PM
    "Martin joined other consumer groups, regulators and payday loan firms at a Parliamentary Select Committee into the industry..."

    Read the full story:




    Click reply below to discuss. If you haven’t already, join the forum to reply. If you aren’t sure how it all works, read our New to Forum? Intro Guide.
    Last edited by Former MSE Wendy; 06-11-2013 at 9:42 AM.
Page 1
  • michael1983l
    • #2
    • 5th Nov 13, 12:55 PM
    • #2
    • 5th Nov 13, 12:55 PM
    There should be a minimum time of 5 working days between applying for credit and actually receiving the cash, except in the case of overdrafts. If you are not eligable for an overdraft, you can't afford a payday loan IMO.
    • Sinhanada
    • By Sinhanada 5th Nov 13, 1:00 PM
    • 486 Posts
    • 293 Thanks
    Sinhanada
    • #3
    • 5th Nov 13, 1:00 PM
    • #3
    • 5th Nov 13, 1:00 PM
    There should be a minimum time of 5 working days between applying for credit and actually receiving the cash, except in the case of overdrafts. If you are not eligable for an overdraft, you can't afford a payday loan IMO.
    Originally posted by michael1983l
    I agree on a time limit but disagree on a payday loan and overdraft. I had a take home pay of just over 2k, but did not qualify for an overdraft (due to some mistakes made two years previous) - this led me to get my first PDL which was paid back easily. Only then did it start to spiral. I approached my bank with a loan plan to pay back everything over 8 months. They refused again - quite understandably.

    I'm now with Step Change and 12 months away from clearing it all...four years later
  • michael1983l
    • #4
    • 5th Nov 13, 1:10 PM
    • #4
    • 5th Nov 13, 1:10 PM
    I agree on a time limit but disagree on a payday loan and overdraft. I had a take home pay of just over 2k, but did not qualify for an overdraft (due to some mistakes made two years previous) - this led me to get my first PDL which was paid back easily. Only then did it start to spiral. I approached my bank with a loan plan to pay back everything over 8 months. They refused again - quite understandably.

    I'm now with Step Change and 12 months away from clearing it all...four years later
    Originally posted by 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.
    • dealer wins
    • By dealer wins 5th Nov 13, 2:01 PM
    • 6,393 Posts
    • 12,823 Thanks
    dealer wins
    • #5
    • 5th Nov 13, 2:01 PM
    • #5
    • 5th Nov 13, 2:01 PM
    You should also not be allowed to hold more than 1 PDL at the same time.
    Choose life
  • opinions4u
    • #6
    • 5th Nov 13, 3:06 PM
    • #6
    • 5th Nov 13, 3:06 PM
    48 hour cooling off period before release of funds.

    No more than one rollover in a six month period.

    Mandatory credit check.

    Mandatory instant report on credit files stating there's a distinguishable PDL and / or PDL application.

    Ban all TV advertising for them.

    Ban all telephone marketing trying to drum up business.
    • imoneyop
    • By imoneyop 5th Nov 13, 3:55 PM
    • 804 Posts
    • 1,298 Thanks
    imoneyop
    • #7
    • 5th Nov 13, 3:55 PM
    • #7
    • 5th Nov 13, 3:55 PM
    Ban the "brokers" who charge a fee just for spamming the victimscustomers contact details to as many payday loan companies as they can.
    • JuicyJesus
    • By JuicyJesus 5th Nov 13, 5:00 PM
    • 3,482 Posts
    • 3,945 Thanks
    JuicyJesus
    • #8
    • 5th Nov 13, 5:00 PM
    • #8
    • 5th Nov 13, 5:00 PM
    Ban all TV advertising for them.
    Originally posted by opinions4u
    This. So much this.

    Having their advertising banned during children's TV is a good start (I personally am in favour of all advertising being banned during all children's TV, not just for payday loans etc) but at the end of the day the adverts still pander to the desperate and those with poor financial education, and their services are presented in such a way that they are shown as far more casual and everyday than they actually are/should be.

    The Cash Lady adverts with Kerry Katona are a shining example, telling everyone how they're "fast cash for fast lives" (i.e. "busy mums") while stating the outright lie that the only alternative is "going to your bank and filling out loads of forms" (when applying for an overdraft or such is probably easier online that using Cash Lady's service.)

    Payday loans have their place. I have no real opposition to their existence. However they should be very strictly regulated and their advertisement should be curtailed quite drastically, in the same way that alcohol and tobacco advertising are strongly regulated. Alcohol advertisements cannot portray alcoholic drinks as promoting sexual success, popularity, success, happiness, attractiveness, etc; payday loan advertisements should not be allowed to portray ease of access, convenience, being a preferred solution for access to cash or use for non-essential expenditure.
    urs sinserly,
    ~~joosy jeezus~~
    • JuicyJesus
    • By JuicyJesus 5th Nov 13, 5:18 PM
    • 3,482 Posts
    • 3,945 Thanks
    JuicyJesus
    • #9
    • 5th Nov 13, 5:18 PM
    • #9
    • 5th Nov 13, 5:18 PM
    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.”
    urs sinserly,
    ~~joosy jeezus~~
    • 2010
    • By 2010 5th Nov 13, 5:21 PM
    • 4,238 Posts
    • 3,363 Thanks
    2010
    Payday lenders risk 'grooming new generation' into debt.

    Not only PDL, the BoE for the last 5 years with .5% interest rates.
    The government with their "help to buy" pushing up house prices, hence debt.
    All the banks with their easy to get credit cards and loans, etc, etc.

    The whole economy is built on debt and borrowing encouraged by all these people.

    Keep borrowing and spending is the mantra.
    • cjno1
    • By cjno1 5th Nov 13, 5:33 PM
    • 31 Posts
    • 9 Thanks
    cjno1
    I still think that the focus should be more on educating the public rather than limiting the payday lenders. I agree there are some seedy practices out there but the big lenders, the ones which are responsible for the vast majority of loans, are very clear about their loan practices, carry out credit checks and make it very clear what you will pay back and when.

    There's a real lack of personal responsibility in this country. There's too many people who say that "it's too easy to get into debt" or "I should never have had access to that money" but it's still your choice to take the loan. Ultimately, only you can decides whether it's the right decision for you to take the loan, you can't say that it's completely up to the company to decide whether you should borrow or not. Just because someone says you can borrow money doesn't mean it's a good idea to do so.

    Could you imagine if you went into a travel agents and signed up for a £1000 holiday which you couldn't afford to pay for later. People would have little sympathy if you tried to blame it on the travel agent for allowing you to purchase the holiday. It's not any different with anything that you buy now and pay for later.

    I'm sorry if it sounds harsh, but simply limiting payday lenders doesn't fix the underlying problem that people are terrible at managing money. If you make it much harder and more expensive to get these loans, how does that help the customers? We should focus on teaching people how to budget, etc, and remove the underlying issue.
    • tinkerbell28
    • By tinkerbell28 5th Nov 13, 7:45 PM
    • 2,586 Posts
    • 5,093 Thanks
    tinkerbell28
    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
    • By matttye 5th Nov 13, 8:36 PM
    • 4,745 Posts
    • 2,994 Thanks
    matttye
    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.”
    Originally posted by JuicyJesus
    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
    • By Mobeer 5th Nov 13, 10:04 PM
    • 1,778 Posts
    • 4,438 Thanks
    Mobeer
    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:
    http://www.mirror.co.uk/news/real-life-stories/loan-shark-forced-drugs-mule-2471770
  • Scotjock
    Multiple loans
    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
    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
    • By mo786uk 5th Nov 13, 10:55 PM
    • 1,358 Posts
    • 573 Thanks
    mo786uk
    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
    • By Sinhanada 6th Nov 13, 10:12 AM
    • 486 Posts
    • 293 Thanks
    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.
    Originally posted by michael1983l
    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.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

920Posts Today

5,689Users online

Martin's Twitter
  • Mini MSE is on half term next week, so I'm excited to be taking the week off to be daddy. As normal I'm signing of? https://t.co/G3366shWh1

  • I once blurted out on @gmb "Theresa May hasn't been given a poisoned chalice - she's been given a poisoned chalice? https://t.co/onfRbY3XVg

  • It'd be fascinating to know how history will judge Theresa May's premiership. Currently, it is hard to see it as a? https://t.co/eH77G0O9LA

  • Follow Martin