The Consumer Finance Association says that the implementation of a instant cash loan database would cripple the short term loans industry due to massive delivery and maintenance costs, even as MPs call for the database as a way to prevent borrowers from taking out an excessive number of loans.
Politicians have been joining forces with critics of the payday advance industry in calling for action to be taken to crack down on poorly regulated and opaque payday lenders and commercial debt management firms. The CFA welcomes any move that is made in order to promote responsible lending and best practice within the industry, said its chief executive, John Lamidey, and while the industry body fully supports efforts to this effect, there has been significant progress made already towards these goals through other governmental reviews and independent research.
These developments need just as much careful consideration as calls from MPs to institute the industry-wide database, the chief executive added. The benefits to consumers may be outweighed by the costs to the industry in such a case, as its implementation would lead to unforeseen expense when it comes to delivering and maintaining the platform.
Mr Lamidey said that these expenses could result in an increase to the cost of lending, making them unavailable to some borrowers. Moreover, the chief executive insisted that there has yet to have been any quality data in favour of such databases, and that while one may remove the access to short term loans for a given consumer does not eliminate a need for finance, and may result in driving individuals in need towards illegal loan sharks.