28 Feb 09 Banks Blamed For Payday Loan Increase
Payday Loan Industry
The ‘Payday Loan’ (short term loan) industry is going from strength to strength! How long this UK high interest loan industry will remain this freely (un-regulated) buoyant is limited – with cries from all areas including Government and individual chartable oragnisations demanding some type of regulation on payday loan lenders.
Non-Traditional Lenders & Traditional Lenders
Payday loan lenders come under the term “non-traditional” lenders while banks and other financial institutions come under the term “traditional” lenders. The difference between these two types of lenders is that of regulation. As non-traditional lenders – payday loan companies and/or short term loan companies have very little (if any) regulation to keep them in check apart from needing to be in possession of a Credit Consumer License. Meanwhile traditional lenders are regulated by the Financial Services Authority.
Canada Calls For Payday Loan Lenders To Be Decrimilised!
In Canada a new bill was recently proposed (Bill C-26) which is an ‘Act to amend the criminal code (Criminal Interest Rate)’ to allow payday loan lenders to lend at higher interest rates than was previously legal! It has to be said the main call for this bill was based on growing increase of individual Canadians that were borrowing money from these types of non-traditional lenders.
Citizens Advice – Banks Close Doors To Low Income High Risk
In the UK the Citizens Advice debt policy advisor Peter Tutton stressed concern about the increase in payday loan lenders and also stated that ‘until recently people on a low income could still access loans from mainstream lenders but now the banks have closed their doors to higher risk customers.’
National Debtline – Payday Loans Expensive
Beccy Boden Wilks, of National Debtline talked earlier in July 2008 about the worrying increase of people turning to the short term loan industry in the UK saying that “If they can’t get another credit card balance transfer, they will start to look at other forms of borrowing, which could be payday loans or pawn broking, which are quite expensive.”
Banks Effect On The Payday Loan industry
What ever opinion you have related to industry of payday loans, it has to be said that the so called “traditional” lenders who have been heavily regulated by the Financial Services Authority – FSA, (namely our high street banks!) are partly to blame for the increase within the sub-prime lending market. After all they have been quietly gambling our money away, wheeling and dealing with risk reward scenarios using our savings in a way that would make even the lowest type of loan shark look like a financial angel! And this week we see yet another ‘bank shame’ with the extortionate pension payout given to Sir Fred Goodwin.
Tags: Banks, Cash Advance, Finance, FSA, Pay Day Loan, Payday Loans, Short Term Loan
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The banks have a lot to answer for! We have just spent collectively billions to rescue them so they would/could start lending but guess what – have you tried to turn your mortgage into an interest only?
Yep – Barclays and other banks have cancelled all reversions from repayment to interest only – so that people who now CANT afford their mortgage because of the ‘credit crunch’ (financial state) that the BANKS created in the first place (and after having bailed them out) they refusing to allow people to benefit from lower mortgage payments meaning they are creating more repossessions.
Gordon brown was right when he said banks should become stewards of our money and not speculators with our money!
Imagine going into a bank today and tem telling you that they will speculate heavily with your money on seriously risky ventures (that might work out) I wonder how many people would put their savings in them!
I got a payday loan once for £150 2 weeks later I had to pay £240! However it was a one off – some these lender pray on the poor.
The banks have a lot to answer for if that was a private company I’m betting the owner would have been given a jail sentence for misappropriation!
So much for the FSA! How could they let this happen right under their noses and they still doing stuff like massive pension payouts – with our money!