Keen to shed its Dickensian image, the payday advance industry is swiftly becoming a mainstream source of short term loans as rough economic waters turn it into a growth industry, experts say.
With Britons walking into pawnshops to put their possessions down as security for instant cash loans and the PR efforts of providers of instant short term loans working overtime, the short term loan industry is rapidly shedding its tawdry image in the UK. However, the industry was dealt a blow by the announcement that the Office of Fair Trading will be launching an investigation due to fears that payday lenders are targeting Brits with financial difficulties.
The payday lending industry has long said that it provides a key service for those Brits who have been left behind by high street lenders. In fact, official figures say that the use of traditional borrowing, such as overdraft facilities and credit cards, has been on the decline as people embrace the flexibility of payday lending and pawnbroking.
However, detractors are critical of the payday lending industry, especially due to reports surfacing that some rogue lenders may be targeting students, the military, the unemployed, and other groups of Brits that may be low income earners or be experiencing financial problems. The OFT will be investigating the claims, with any evidence used to raise industry standards to eliminate the practices, though OFT officials say that the practice is not endemic in the industry but could only be the work of a few disreputable lenders.
The last time the industry watchdog examined the payday sector was in 2010, though it has grown by a considerable margin over the past two years.