Lenders are out of control – can anything be done?

Weekly payday roundup: 7 days ended 29 June 2013:

Payday advance lenders have been in the news this week, and not in too many positive news stories either – but you don’t need me to tell you that, do you?

However you might not be aware of some of the particulars of the news stories that have been making the rounds over the past few days. In fact did you know that one of the most egregious examples of runaway payday advance lending-related debt has been revealed just the other day? It’s true – one borrower saw their debt balloon to an unconscionable £15,500 just two short years after taking out one £150 loan.

StepChange went public with the case recently in an effort to really bring home just how injurious payday lenders like Wonga and QuickQuid can be to someone’s finances. Things get even worse if you take out a payday loan you can’t afford to repay, and you’ll soon see massive debt like this as well if you let things get out of control.

And let’s face it: payday lenders are truly the ones running amok right now. It’s gotten so bad that the government has called a summit in order to discuss the issue. Consumer Minister Jo Swinson will be heading the meeting, which will include the likes of not just debt charities and financial regulators but payday loan firms as well, and the subject of the summit will be how to protect consumers better.

Is it just me or does the idea of lenders sitting down across the table from regulators and debt charities seem to be doomed to failure? For what it’s worth these firms have already demonstrated their utter lack of regard for UK consumers – especially those struggling with debt problems – so I truly don’t see why they’re going to have anything to say in the discussion that will be anything besides ‘it’s not our fault you lot can’t handle your money problems.’

Payday lenders typically say they fill a gap left by traditional lenders when it comes to Brits who can’t qualify for a loan. This may be true, but they’re also widely unregulated and they certainly take advantage of that fact; it’s time to inject some more regulation into the payday lending industry and capping interest rates so a £150 loan doesn’t turn into a £15,000 one is absolutely in order, despite the ‘chilling effect’ that the talking heads warn this would cause!

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