Twice as many people seeking help for payday loans problems

The number of people seeking help for issues with payday loans providers has almost doubled in the last year.

This is according to the debt charity…

The number of people seeking help for issues with payday loans providers has almost doubled in the last year.

This is according to the debt charity Stepchange, which has published its latest study. It found that nearly 67,000 requested its advice during 2013, a rise of 82 per cent on the year before. 

Results showed the average client now held three different payday loans and owed £1,647 in total. The charity claimed this showed more people were simply letting their debts roll over their borrowing until the following month. It warned the population was getting itself into more and more financial difficulty.

The Financial Conduct Authority (FCA) was urged to take immediate action on the problem, as Stepchange stated its figures showed people were able to continue to ask for more money, without essential checks taking place. One client, it said, saw the amount he owed rise from £200 to £1,851 in the space of just three months.

Affordability is another key issue raised by the report, as results found the average income of those seeking help was £1,381 per month. Considering this is almost £300 less than what they owe, the charity warned more needed to be done to prevent more people drowning in debt.

Mike O'Connor, chief executive at Stepchange, commented: "The widespread harm and misery caused by payday loans continue unabated. The industry has failed to address the problems causing untold misery and damage to financially vulnerable consumers across the UK."

In response to the problem, the FCA is expected to bring in a cap on interest and charges. It will also introduce new rules governing the use of affordability checks.

The study also found that short-term loans were not the only financial problem clients had to contend with. 62 per cent of respondents had overdraft charges, while 60 per cent owed money on credit cards. Debts to catalogue companies were also an issue, with 39 per cent of those questioned admitting they were behind on payments.

By James Francis

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