Payday lending summit is called by ministers

[AAD News Feed]

Payday lending summit is called by ministers

This is a duplicate of the Blog Entry made on 25th June 2013 16:22.

Lenders, regulators and government ministers are being summoned to a summit about the UK's payday loans industry next week. The meeting aims to come...

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[5corpio]

Re: Payday lending summit is called by ministers

Payday loans industry to face competition inquiry

The Office of Fair Trading (OFT) has referred the payday lending industry to the Competition Commission because of concerns about "deep-rooted problems with the way competition works"....Read more HERE at aad forum blogs

[pompeyfaith]

Re: Payday lending summit is called by ministers

There sumit should go down well now then with the competition Commission on the backs of these payday sharks some of which have connections to Government

[SaltnVinegar]

Re: Payday lending summit is called by ministers

There sumit should go down well now then with the competition Commission on the backs of these payday sharks some of which have connections to Government

PF - the issue is much worse than that. A lot of these companies are underpinning by capital financiers who have some very interesting names amongst their investors.

Vested interests springs immediately to mind...............

[SXGuy]

Re: Payday lending summit is called by ministers

PF - the issue is much worse than that. A lot of these companies are underpinning by capital financiers who have some very interesting names amongst their investors.

Vested interests springs immediately to mind...............

That doesnt suprise me, only private investors would invest money in high risk high return areas.

PDL interest rates over 4000% means that financers will take the risk to gain the return.

I hope that this whole investigation is not just smoke and mirrors, because the media keep saying, its to see what can be done, and why they dont do more checks on people who would otherwise not be able to repay the loan.

Anyone with half a brain cell can see, they dont do credit checks which is the main reason why 90% of people use PDL's and the interest rates they charge, reflect the risk of not checking credit reports.

They should be looking in to how they are able to charge such interest rates, not why they dont check people applying.

To me it just seems like its a load of bollox designed to make the consumer think they are doing something about it, when truth is, they are not.

If anything is to come of this i can bet, it will be just a bunch of ministers asking PDL's to voluntarly sign up to an agreement which asks them to add more to their lending criteria, and i doubt it will change much whatever they add to it.

[pepe2008]

Re: Payday lending summit is called by ministers

It may not be the right attitude and some may argue that there IS a need for Short Term Loans. There were always these Loans available but you took them from 'local' Finance Companies or Loan Sharks as they were better known.

Nothing will change on this front, as far as I am concerned, until somebody ( or some Body ) stands up and has the guts to strictly regulate what happens when the Debtor cannot meet the Terms.....and that doesn't mean let them keep rolling it over!

No affordability checks are done at the start and it's down to the old Self Certification method. Therefore, I would propose that anyone with a PDL should just say ' Sorry, I thought I could repay it and now I can't' get themselves on an arrangement so that it takes ages for the scum to get their cash back. Or, more bravely, just don't repay them if your financial situation is that bad. They would hardly be regarded as a Priority Debt.

The sooner they are strangled out of their current business model the better.

A friend works at Payday UK and the first Dept they tried to chop in the interest of making more cssh was the affordability/multiple applications department !

[SXGuy]

Re: Payday lending summit is called by ministers

I have no issue with self cert short term loans, or even the high interest rates they charge, my issue is with how they seem to be unregulated in the way they handle it and how people are sucked into taking these loans without thinking about what will happen.

As others have said, if you dont have £400 this month, what makes you think you will have £600 extra next month.

Rolling over fixed term loans at high interest rates should be a no no in my opinion, and the moment you default on a payment, the loan should end, interest should be frozen and the full amount should be payable.

Thats how any respected finance company would opperate (if there actually are any)

Lastly, we know that alot of these PDL's are the same company, and when you are struggling to repay one, their other arm bombards you with pre approved loans to add to the mess.

They actually want you to not be able to repay because they will get more out of you in the end (unless you are an AAD member )

[ken100464]

Re: Payday lending summit is called by ministers

They probably will curb it somewhat just because the banks who run the country will be mildly upset that they aint getting any of the action. These are the very sort of loans that used to be dealt with by the sub prime cards. If people cant get them they turn to alternatives. Either those nice puppets on TV or benny break your leg scalari at Marlons garage. Its not really a hard choice when your desperate.

But their monumental feck up restricted credit to all but the of us thus allowing these peeps to become more mainstream.

Sharks have always been there and always will be either in full view like now or in the shadows as is normal. Even the big guy had to do some chucking out of the big house in the big book.

If true affordability was made the be all and end all of credit for everything then most of these problems would go away. But people who can really afford credit are not really the people who make the banks money. They are the ones that stooze and tart and cost the banks money cause they just play them.

The public dont want things tomorrow when with credit they can have things today not really thinking that the interest on that want now lifestyle costs them big time.

[SaltnVinegar]

Re: Payday lending summit is called by ministers

It may not be the right attitude and some may argue that there IS a need for Short Term Loans.

Although this always surprises people I totally agree with you. I'm not against 'short term loans' (as payday loan companies now like to brand them).

However what I am against is that there is no level playing field.

If the consumer were really offered a choice between walking into a high street bank and being offered a 30% interest loan or going to a PDL company and taking out a loan at 9000% interest and they chose the latter then good (or stupid) for them!

However those that turn to PDL companies really do not have that choice.

Also that 'choice' is not on a level playing field as far as the finance industry is concerned as anyone taking out a payday loan is immediately branded by most high street lenders now as a risk when looking at the CRA files.

The other big issue is that current legislation was simply not intended for the 'short term loan' market.

A friend works at Payday UK and the first Dept they tried to chop in the interest of making more cssh was the affordability/multiple applications department !

Ha! PDUK - One of the biggest culprits of having multiple 'brands' out on the market purporting to be separate companies (operating under the same CCL also a big no no).

They probably will curb it somewhat just because the banks who run the country will be mildly upset that they aint getting any of the action

Actually the banks don't give a monkies as they ARE getting plenty of the action - just not being exposed to as much risk.

The investment arms of the banks are actually funding many of the payday loan companies!

But their monumental feck up restricted credit to all but the of us thus allowing these peeps to become more mainstream.

This is totally my personal opinion (but based on some conversations I have had with certain individuals in the 'investment section)..............

Its not a feck up but deliberate policy as the have their sticky fingers in the pie anyways, just their exposure is done through trading arms and at less direct risk.

Unfortunately these companies are doing a good marketing job as advertising themselves as mainstream when they are anything but.

What is happening is there is being a two tiered financial market now being created where anyone who has taken on short term lending will now find themselves having trouble getting any products from mainstream lenders and so will get stuck in a high interest predatory market.

I've been warning about this for almost 2 years now and its started to happen. Unless PDL companies and legislation are brought into line then its only going to get a lot worse.