BIS calls for more payday loan transparency

The Department for Business Innovation & Skills (BIS) has called for more transparency in the payday loans market.

According to the government department, payday lenders have agreed to update their codes of practice, which will help to protect vulnerable consumers with credit card debt.

Business minister Norman Lamb noted that the four organisations that represent the majority of payday loan providers have agreed to push for greater transparency and BIS has set a deadline of July 25th for the reforms.

Recent research from MoneySupermarket.com found that people are using credit to stay afloat between paydays as the cost of living increases.

Mr Lamb said: "Today's agreement by the payday lending industry is a step in the right direction."

He added that payday loans should only ever be used as a short-term solution to an immediate problem and not as a long-term debt consolidation facility – primarily because the interest rates are so high.

"I would urge people to think carefully before taking out a short term loan," Mr Lamb concluded.

Posted by Amy White