Campaigners for consumer rights have said that the recent moves to tighten up the way in which short term loans companies operate do not go far enough and are “just tinkering around the edges” as declared by Labour Member of Parliament Stella Casey.
To be fair to the short term loans industry, their own representatives have been keen to show willing in the attempt to make the activities of their members more accountable. The FLA (Financial Leasing Association) for instance has proposed that the number of instant cash loan roll-overs should be restricted to no more than three in future, while the CFA (the Consumer Finance Association) has called for more transparency from the instant cash loan sector.
However, these moves have been dismissed by social welfare campaigners as too timid and have pointed out that Britain has far fewer restrictions and regulations than many other countries such as the U.S.A. and Australia.
Campaigners for consumer rights have stressed that the rule changes proposed by both the FLA and the CFA do not go far enough to offer sufficient protection to their potential customers.
Stella Casey has been campaigning for a limit on short term loans and thinks that rules about extensions will do nothing to relieve the pain that these loans cause in the community. She has pointed out that in the U.S.A. when roll-overs were restricted, borrowers simply closed down one loan account and started another one. She also said that it might work only if there was a ban on anybody taking out another loan for, say, a month after the roll-overs ceased.
A prominent counselling advice service has said that it would be better to prohibit any roll-overs at all. They say that one short term loans company, “Dollar Financial”, owner of one of the major British short term loans companies, operates in Canada and is agreeing to a prohibition on loan extensions in Canada while promoting them here.
A lot of the criticism of short term loans practices has come from the huge interest rates that are charged and the dubious efforts to extract debt repayments once they have been incurred.