There is a dire need of new legislation in order to protect borrowers from instant cash loan companies from putting them into an ‘impossible debt’ situation, according to the words of one financial charity official.
Stuart Carmichael, the Debt Support Trust’s director, recently commented that legislation needs to be put in place that gives government bodies the authority to overrule credit agreements of the kind employed by providers of no credit check short term loans. Mr Carmichael added that steps like these need to be taken in order to provide some respite for consumers who are suffering under debt levels that are too high, allowing for a lower repayment to be made instead.
The current payday advance lending industry is not willing to engage in such a dialogue at this time, the debt charity remarked, observing that borrowers are not truly certain how any given payday lender will act in a situation, as each company approaches the issue from a different angle. Additionally, debt management firms have recently been issued new guidelines by the Office of Fair Trading in regards to the standards that must be met in terms of providing debt advice and solutions.
The OFT’s new guidelines were welcomed by David Mond, Debt Resolution Forum chairman and chief executive of Cleardebt. Mr Mond stated that the OFT’s standards, while heightened from previous levels, are actually more permissive and less exacting that the forum’s own standards.
Industry experts say that you should only take out payday lending sparingly, and only if you are secure in knowing you will be able to repay the loan at the end of the term.