Payday loans ‘causing more debt crises’

A rising number of people have been getting into very severe debt because of payday loans, according to the Money Advice Trust.

The charity said its National Debt Line has taken 9,500 calls from people in trouble with payday loans in the last six months, with this figure up 116 per cent on a year ago.

Such figures were announced in the wake of an announcement that such lenders have agreed a new code of conduct with the government aimed at increasing consumer protection.

Chief executive of the trust Joanna Elson said: "Payday loans can have a dangerous tendency to make a bad situation significantly worse."

She warned that the new code may do little to ease abuses of existing standards they are meant to abide by as part of the terms of their licence by the Office of Fair Trading, with its irresponsible lending guidance being repeatedly flouted.

Citizens Advice chief executive Gillian Guy said she hoped the effect of the new code would be to give consumers better information and help them make wiser decisions about whether to take on a payday loan in the first place. 

Posted by Paul Thacker