Time's up for payday lenders
by Will Dahlgreen in Editor's picks, Front Page and Life
Thu August 1, 2013 9 a.m. BST
89% of the British public say payday lenders ‘take advantage of the vulnerable’, and nine in ten say limits should be introduced on the amounts they can charge
The Archbishop of Canterbury Justin Welby has pledged to compete payday lenders “out of existence,” by filling the market with credit unions. The move follows suggestions that companies such as Wonga who offer fast, small loans at extremely high interest rates, could have to put a cap on the cost of credit. New research by YouGov finds vast opposition to the lenders, and huge support for new regulation.
89% of British adults say that ‘payday loans companies take advantage of the most vulnerable in society.’ In no demographic measured do more than 10% disagree with the statement.
14 out of 50 payday lenders investigated by the Office of Fair Trading have been closed for encouraging borrowers to rollover loans they cannot afford. 88% of the public say ‘Payday loans encourage people to get into more debt.’
90% of the public think ‘limits should be introduced on the amount that payday loans companies can charge,’ a move suggested earlier in July by the Financial Conduct Authority.
Credit Unions, the financial bodies Archbishop Welby wants to help outcompete payday lenders, are community-run organisations which also offer small loans at lower rates, but they are often slower than payday lenders and less accessible. The poll finds that 65% would choose to borrow from “a lender where delivery of money takes longer because membership and paperwork were required, but with lower interest rates”, whereas only 8% would choose “a lender with higher interest rates, but minimum hassle and instant delivery of money.”
Image courtesy of Getty Images