Citizens Advice sees payday loan queries half
05/08/2015
Citizens Advice has reported a steady decline in the number of people seeking help due to debt from payday loan companies.
The charity has released figures showing a 53% drop in the number of people it helped with payday loan problems in April to June 2015, compared with the same time last year. The service helped 4,315 people with problems in 2015, which is a dramatic fall from 9,243 from 2014.
Citizens Advice noted that they started to see a reduction in contact about payday loans in April 2014, when the Financial Conduct Authority introduced new rules and regulations for payday lenders such as limiting the number of times a loan can be rolled over, stopping lenders from collecting loans more than twice and introducing a new risk warning.
Gillian Guy, Chief Executive of Citizens Advice said:
“High-cost credit is not the answer to financial difficulties.
“All too often payday lenders were lending to people to who couldn’t afford to repay. The 53 per cent decrease in payday loan issues reported to Citizens Advice shows the new regulations are having a positive effect for consumers. The FCA needs to keep an eye on newer forms of risky credit like guarantor and logbook loans, as well as payday lenders.
“We are seeing a shift away from consumer credit debt towards problems with council tax, rent and utilities, as people struggle to cover day to day costs.
“There is a need for more responsive short-term credit options from high street banks. But it is also crucial that banks and creditors direct people towards free debt and money advice, especially when borrowing is not a suitable option for them.”
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