One consumer credit watchdog has recently commented on the role instant cash loan providers could possibly play in regards to the debt accrued by lower income families in the UK in its response to new consumer credit improvement measures instituted by the Department for Business, Innovation and Skills.
Consumer Focus remarked that they had concerns in regards to the debt collection, sales, and marketing practices of a small number of companies providing instant cash loans in the UK. The watchdog expressed a desire to see more safeguards sensibly put in place in order to prevent regular borrowers of quick loans from spiraling down into debt.
Consumer Focus chief executive, Mike O’Connor, made several suggestions regarding some lender practices, such as limiting the number of rolled-over loans, or even loans altogether, to no more than five every year. Mr O’Connor also called for more traditional lenders such as banks and business societies to extend short-term credit to customers in need of cash, adopting more transparency in their charges and overdraft fees.
However, the consumer watchdog agreed with the government’s new proposal to prevent retailers from offering a discount on purchases made with store cards at the time of taking one out, calling it a step in the right direction. Consumers will undoubtedly consider their options much more carefully before resorting to store cards to do their shopping, as this type of credit can be extremely expensivee, said Mr O’Connor.
Consumer Focus did express its disappointment that the new measures as proposed by the government are not compulsory, and that there were no current plans to add new laws to the books to protect British consumers from exorbitant bank charges.