The Consumer Finance Association has said that it would be impractical to institute a universal instant cash loan customer database as it would be too expensive to both maintain and deliver, short term loans experts recently reported.
The database, which has been called for by MPs in order to prevent borrowers taking out a multitude of no credit check short term loans and thus dig themselves too deep into debt, would be a step towards curbing poorly regulated and opaque payday advance lenders and debt management companies, a government report said. However, CFA chief executive, John Lamidey, said that while the industry body welcomes moves that work to promote responsible lending and best practices within the payday lending sector, the recommendations of the report need to be viewed in consideration of the context of progress recently made in improving industry standards through other governmental reviews and research.
The Business, Innovation and Skills Committee report remarked that companies need to become more transparent, especially in the case of lenders who are turned to by borrowers who need help making ends meet. With deteriorating employment conditions and high living costs continuing to squeeze households in the UK, the number of British families in financial distress has grown exponentially since the worldwide economic recession, the report added.
The Government needs to limit payday lenders permitting borrowers to ‘roll over’ their loans, the report said, and also called for all transactions to be recorded on a database after finding that some borrowers have taken out as many as 20 loans in a spiral of unmanageable debt.