It’s a case of ‘too little, too late’ when it comes to the steps being taken to protect Brits who take out short term loans, according to Consumer Focus.
The issue of high interest rate short term loans has recently been raised by the business, innovation and skills select committee, with MPs stating that action needs to be taken to eliminate abusive practices employed by some payday advance lenders that leave borrowers desperate for help, vulnerable, and with unmanageable levels of debt. Norman Lamb, consumer affairs minister, said in a recent interview that the government was currently reviewing the no credit check short term loans industry, and while the report was not due until this coming summer, firms could face the loss of their licences if they are found to be in breach of acceptable behaviour standards.
MPs have called for governmental limits to be placed on payday lenders rolling over loans for their customers, as interest keeps piling up every time these loans are rolled over. With information coming to light that some borrowers have taken as many as 20 loans in a vain attempt to manage debt, lenders also need to create a centralised database to record all transactions, MPs also said, and that regulators need to be given additional powers to block financial products that cause undue harm to borrowers as well as have a fast-track procedure for suspending the credit licences of maleficent lenders.
The report also made the recommendation that short term loans should no longer use standard APR measurements and instead make the actual cost of repayment, including fees and interest, much clearer to prospective borrowers.