New CAB campaign warns of payday loan dangers

WEST Berkshire Citizens Advice Bureau has launched a new campaign to raise awareness of the dangers of payday loan providers.
The payday loans consumer education campaign, which will run until January, was formally launched at the bureau’s annual meeting last week by chief executive Jan Rothwell and West Berkshire Council’s Trading Standards manager, Sean Murphy.
Days later, the Financial Conduct Authority, which regulates financial firms providing services to consumers, announced plans to impose stricter rules on payday lenders, proposing that all borrowers should have an affordability check before being given a loan.
Addressing the recent meeting, Mrs Rothwell said: “We have had cases where people have got eight or nine pay day loans running at once, with no way to pay them back.
“People have described them as the quickest way to get into unimaginable debt and it is a growing problem.”
The council and the CAB are now working alongside credit unions and plans to hold information sessions at Newbury library and other venues in an attempt to raise awareness of the issue.
It will also attend public meetings to inform people of their rights when dealing with lenders.
Some of the problems of payday loans raised at the meeting were a lack of understanding on how quickly interest can escalate, affordability, confusion over the right to cancel, fraud awareness and harassment.
Mr Murphy said: “Payday loans are legal but the way in which some of them operate is questionable.
“Our job is to enforce so we will be looking into any cases of extreme harassment, wrongdoing or fraud and we will take it forward.”
According to national CAB research, 160 complaints were made to the Financial Ombudsman between April and June this year about payday loans, with 72 per cent upheld in favour of the consumer.
The same findings revealed that of the 665 payday loan cases reported to its consumer services between January 1 and June 30 this year, at least 76 per cent could have grounds for an official complaint.
Chief executive of the FCA, Martin Wheatley, said: “Today I’m putting payday lenders on notice: tougher regulation is coming. The clock is ticking.”
A short film called Payday Loans: Know Your Rights, has also been launched and can be viewed at www.adviceguide.org.uk