Bradford hit by rise in instant cash loan debt but face catch 22

There’s an old saying, if you live south of The Watford Gap, that goes along the lines of, “Ee, it’s grim up t’north”. Given the increase in people taking out short term loans in Bradford this last twelve months, they may just have a point.

The trend nationally, for householders reporting their ever-increasing burden of debt to the Citizens Advice Bureau, is that debt has almost doubled over two years; between ’08/’09 period to ’10/’11 the CAB has seen numbers rise from 1.35M cases to just over 2.25M, in total. Compare that with the rise in Bradford and you’ll begin to see why such a grim picture is being painted. Last year, in the Yorkshire city, ten percent who reported trouble with debt had turned to short term loans to try to ease the burden. That number has rocketed in twelve months to a half of those now reportedly struggling to make ends meet having at least one instant cash loan!

And there really is no escaping repaying the loans; the main issue reported by the Bradford townsfolk is that, as soon as those struggling are paid, the short term loan repayment is being extracted from the borrowers bank account. This is, however, usual. Once you click the ‘submit’ button, stating that you have familiarised yourself and are fully conversant with the terms and conditions, you are issuing instruction for the payday lender to take back the repayment that you agreed on the scheduled date.

It is not this point that is the issue, though, as the Office of Fair Trading launch their investigation into online, no credit check loan providers. If that were the only sticking point, the OFT would not be re-investigating the sector. The repayment schedule is in their terms and conditions, which have been okayed by the regulatory body (the licensing commission and the FSA), therefore the onus of responsibility is firmly on the shoulders of the borrower to ensure that they have the money when the repayment is due.

No, the reason the OFT are getting involved again, and the cause that Alex Bohdanowicz, specialist services manager at the local CAB, wants to see championed, is that instant cash loan companies may be targeting susceptible individuals of whom they are fully cognitive of the fact that they may not be able to repay, hence triggering the roll-over loan, earning the quick cash advance lender extra returns. How difficult or easy that will be to prove will only be known after the OFT have concluded their investigation by the number of licenses they revoke.

But even Alex is split over the decision whether to regulate the online financiers’ lending capacity. In her role she sees how very real the struggle from one pay to the next genuinely is. When families are using short term loans to put food on the table, do you really want to be taking that facility away from them, even though some of the clients that have approached her have taken out up to six short term loans?

The director of consumer credit for the Office of Fair Trading, David Fisher, confirmed that they believed targeting vulnerable individuals was “unacceptable” and that, until standards within the sector are driven up, enforcement action will be taken against instant cash loan firms found guilty.

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