Citizens Advice response to R3 report on payday loans
7 December 2011
Gillian Guy, Chief Executive at Citizens Advice, said
“As the payday loan industry grows, we have seen a four-fold increase in the number of people with payday loans coming to us for debt advice in the first quarter of this year, compared with the same period two years ago.
We are concerned that some of the people we are seeing seem to be using payday loans to deal with existing financial difficulties. 40% of people we see with payday loan debt have another high-cost credit loan and on average, CAB clients with payday loan debts had eight debts, while those without payday loans had five. Our evidence therefore suggests a pattern of people in long-term financial difficulty with other debts, who are much more likely to take out a payday loan to try and deal with these problems.
And yet, the payday industry remains inadequately regulated. We have seen financially vulnerable consumers unprotected from a variety of unfair practices carried out by payday lenders. Some have been able to take out unaffordable and unsuitable loans, see their debts balloon, and are offered multiple rollovers. When they are unable to pay, many are then subject to aggressive collection practices.
Many people are lost in a system that offers little protection and inadequate access to affordable credit. The Government must now deliver a much more powerful consumer credit regulation framework to protect financially vulnerable people from credit dependency and unmanageable debt.”
Notes to editors
- The Citizens Advice service comprises a network of local bureaux, all of which are independent charities, and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more information in England and Wales see www.citizensadvice.org.uk
- The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality. For online advice and information see www.adviceguide.org.uk
- Citizens Advice Bureaux in England and Wales advised 2.1 million clients on 6.9 million problems from April 2011 to March 2012. For full 2011/2012 service statistics see our quarterly publication Advice trends
- Out of 22 national charities, the Citizens Advice service is ranked by the general public as being the most helpful, approachable, professional, informative, effective / cost effective, reputable and accountable (nfpSynergy’s Brand Attributes survey, May 2010).
- Most Citizens Advice service staff are trained volunteers, working at around 3,500 service outlets across England and Wales.