Consumers ‘put under pressure’ by payday lenders

Seven in ten consumers with payday loans are being put under undue pressure to roll them over.

This is according to Citizens Advice and the statistics make for worrying reading, as rolling over the financial product means individuals will encounter higher interest rates. The body also stated 62 per cent of those taking out loans do not undergo the correct checks to establish if they can repay them. 

Citizens Advice chief executive Gillian Guy said payday loan companies are "failing to treat their customers fairly". She added reports have emerged that people are being "pestered" to take out more loans once they have repaid the initial one. 

"All too often adverts mask the real hardship caused by irresponsible lending. Payday loans should come with a health warning containing information about the costs and the impact of taking out a loan," Ms Guy stated. 

She has welcomed the latest initiative by the Financial Conduct Authority to tackle the issue and she thinks it is essential that these new policies are "adhered to". 

The organisation discovered 20 per cent of firms are failing to make it clear how much a loan is going to cost, while 57 per cent do not warn their customers the measure should not be used long-term. 

Over four-fifths (82 per cent) of payday lenders also failed to demonstrate a sympathetic attitude to people who were having problems repaying their loans. 

A number of residents in Merseyside have been struggling to make ends meet, which has resulted in an increase in personal debt. According to the Liverpool Echo, some 2,000 households across Liverpool and Wirral are collectively over £47 million in arrears. 

This demonstrates the scale of the problem, as the increase in the cost of living has left many people without enough disposable income. If they cannot bring their situation under control, debt management is something worth considering. 

By Amy White