June 19 2013 Latest news:
Adam Aiken, Editor
Wednesday, March 7, 2012
A crackdown on debt management companies and payday loan providers is needed, with the industry responsible for “vulnerable and desperate” people losing their homes.
That is the verdict of an influential panel of MPs, which is calling for greater transparency in a market that has boomed in recent years.
A report by the Business, Innovation and Skills Committee, to be published today, calls for a fast-track procedure to be put in place that enables lenders’ credit licences to be suspended.
The Debt Management report also calls for a limit in the rolling-over of payday loans, and for lenders to record all transactions on a single database.
Payday loans – which typically charge interest of several thousand per cent on an annual basis – are designed to be fixes for short-term cashflow problems, but the MPs heard of cases where consumers found themselves trying to juggle more than 20 of these loans at once.
“During these difficult economic times, increasing numbers of people up and down the country – not least some of the most vulnerable members of our society – are relying on the provision of consumer debt management services and payday loans to make ends meet,” said committee chairman Adrian Bailey.
“And yet this industry remains opaque and poorly regulated.”
The committee found that in extreme cases, consumers had lost their homes after their problems spiralled out of control, falling victim to the very companies they had turned to for help.