Riverside backs payday loans crackdown campaign
Published by Riverside for Riverside in Housing and also in Communities
Social landlord Riverside is supporting a campaign for a shake-up of the payday lending industry after a survey revealed that almost half (48%) of those who have taken out payday loans can’t afford the repayments.
The research by consumer campaigning charity Which? also revealed that 29% of payday loan users have taken out credit that they knew they couldn’t repay. In the last 12 months, 57% of people with payday loans have incurred charges after missing a repayment.
Riverside is backing a call by Which? for a shake-up of the industry to protect potential borrowers from getting into greater financial difficulties.
Which? interviewed a random sample of 4031 British adults in August. Of those who had taken payday loans, 43% said it was too easy to get credit, while almost a third (31%) said they had been hassled by debt collection agencies within the last 12 months. One in five said they had been hit with unexpected charges.
The research showed that people are relying on payday loans to pay for rent and regular bills far more than they are using credit cards.
An alarming 38% of payday loan customers are using the cash to pay for essentials such as fuel and food. A fifth use the cash — which can come with an annual interest rate of up to 4,215% — to pay the rent, while a quarter use the money to pay off existing debts.
Laura Bostock, Riverside’s Project Manager for Financial Inclusion, said: “It is depressing that payday firms are booming in the recession as hard-up families desperately seek out easy to access cash. It is wrong that these firms are taking advantage of people in financial difficulty and profiting out of their hardship.
“We have recruited a team of Community Stop Loan Sharks Advocates to support the work of the England Illegal Money Lending Team in the community but the scary thing is that these payday loans are legal. More needs to be done to clamp down on irresponsible lending by introducing tighter rules for payday lenders.”