‘Horrifying’ payday loan debt problems - Citizens Advice reveals new cases from June/July 2013
Citizens Advice Chief Executive Gillian Guy describes some of the payday loan problems reported to the national charity in the last month as ‘absolutely horrifying’ as borrowers face losing their jobs, homes and one person said they contemplated suicide.
The evidence comes as MPs are set to vote on a Private Members Bill on Friday 12th July, tabled by Paul Blomfield MP and supported by 11 cross-party MPs, which seeks a clamp down on payday loan advertising.
Citizens Advice is urging MPs to back the bill. The charity has consistently expressed concerns that adverts for payday loans mask the hardship and devastation caused by irresponsible lending and appalling treatment of customers.
Some payday loan customers have reported to Citizens Advice that once they have paid off their loan, they are contacted by marketing calls and text messages offering further loans at a discount price.
Citizens Advice analysed feedback from payday loan customers, reported to the charity through its payday loan tracker, in June and July this year.
Serious cases for concern include:
Borrower contemplated suicide: a payday loan customer said they contemplated suicide after they were contacted 20 times a day from the lender who even called their employer to chase their debts. The borrower now deems payday lenders to be ‘callous uncaring vultures.’
Job at risk with just £1.17 to live on: one borrower fears he will lose his job and home as payday lenders left just £1.17 of his weekly wage in his bank account, leaving him without money to pay for travel to work or board where he is staying.
Discount loan offered after original repaid: a borrower was pestered with numerous phone calls, texts and emails offering to roll over the loan. As soon as the loan had been repaid they then got a text offering a new loan at a discount rate.
Payday lender takes money for bailiff pay off: the money a person had put aside to pay off a bailiff for council tax debt was taken from their bank account without any warning. They’re now worried they’ll end up in court due to the council tax debt.
Recent figures from Citizens Advice found that in more than 4 out of 5 cases, where people are struggling to pay back the loan, lenders aren’t freezing interest or charges nor are they treating people sympathetically – despite vowing to do so.
Citizens Advice Chief Executive Gillian Guy said:
“Some of the problems reported to Citizens Advice about payday loans are absolutely horrifying. People are in severe debt and distress because of the exorbitant pressure payday lenders put them under to repay unmanageable loans.
“I’m appalled that some payday lenders are still treating their customers this way. Lenders need to seriously clean up their act so that people who are looking for short-term credit have responsible market to engage with.
“The Private Members Bill going through Parliament on Friday is a step towards protecting people from predatory payday lenders and I encourage Members of Parliament to support it.”
Anyone struggling with payday loan problems can contact their local Citizens Advice Bureaux.
Notes to editors
- The Citizens Advice payday loan tracker gathers feedback from payday loan customers through an online survey, questionnaires in bureaux and face to face surveys on high streets. The study was promoted widely through national media and other organisations including Nationwide, Which?, Toynbee Hall and other debt charities. The tracker monitors whether lenders are abiding by their own customer charter .
- 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.