More consumer protection is needed, financial expert says

One financial expert has said that the biggest problem to be had with payday lending is that there are simply not enough protection measures in place to prevent consumers from falling into massive debt as a result of taking out too many instant cash loans.

Martin Bamford, a chartered financial planner, recently remarked that consumer protection measures are compulsory for any financial sector market that revolves upon taking out unsecured lending. However, the payday advance sector is weak in this regard, exposing borrowers to substantial risks that are much more closely managed in other arenas, such as credit card lending.

Advertising efforts on the part of payday loan providers have been stepped up recently, Mr Bamford pointed out, which he attributed to a response to the perception of demand and need for the particular financial services they offer to the public. However, the spectre of payday lending has been rising amongst any who cannot clear their debts before their next pay date, as lenders within the short term loans sector can (and invariably will) charge crippling fees and interest if you miss your repayment deadline.

Of additional worry is that a majority of those taking out payday lending are not doing it for isolated financial emergencies but for the payment of everyday household bills. Consumer advocates Which? conducted the research, discovering that around 6 out of every 10 borrowers are engaging in the practice; this is infinitely more dangerous than simply using a payday loan to bridge the gap on an unexpected expense, such as having to pay for repairs to your car, as relying upon payday lending for regular bills could result in having to take out a multitude of loans over time.

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