The Government found itself besieged lately by accusations leveled that it was out of touch in regards to the instant cash loan industry when it was found that it was using official figures that were out of date by two years.
The number of businesses offering instant cash loans has risen at a substantial rate over the past 12 months, prompting the Government to undertake a review of the industry. However, a Department for Business report is not due until the summer of 2012, leaving the only data available to the Government a 2009 study conducted by the sector watchdog the Office of Fair Trading.
Debt advocacy organisation the Centre for Responsible Credit’s chief executive, Damon Gibbons, called it ‘woeful’ that the Government was using 24 month old information in order to make decisions regarding providers of short term loans. Mr Gibbons called it a ‘matter of urgency’ to both consider a national database for payday lenders and to also improve the information regarding the market size and its growth figures.
The United States, where instant cash loan companies rose to prominence, has been careful to monitor their industry in order to prevent American low income earners from being drawn into unmanageable debt levels, the chief executive said. Now, with the UK now becoming a hotbed of payday lender activity, Mr Gibbons called for similar regulations placed on the British counterpart of the American import.
An American database used for loan registration had not placed any limitations on the US market, said the chief executive. In fact, the Florida-based database has actually aided to reduce debtor defaults, Mr Gibbons added.