One MSP has recently called upon the Scottish Government to issue warnings to people about how dangerous taking out short term loans from payday advance providers can be, especially in light of how many are brought low by rocketing debt levels as a result every year.
Kezia Dugdale, Lothians Labour MSP, said that payday loan providers may make their cash easily accessible, but with annualised percentage rates equivalent to as high as 4,000 per cent, the ultimate fate of all too many is that they end up facing massive repayments after taking out loans as small as £100. However, the Scottish government has been reticent to take any action against payday loan providers, as it is a responsibility of Westminster to provide regulations for consumer practices.
Ms Dugdale acknowledged that the government’s hands were tied in taking any concrete action, but that this did not preclude it from issuing warnings to Scots about how dangerous taking out payday lending can become by undertaking a major publicity campaign instead. Writing to Fergus Ewing, the enterprise manager, Ms Dugdale asked that the Scottish Government to consider launching a comprehensive and all-encompassing advert campaign in order to expose the dangers of payday lenders and the loans they offer to people.
One of the other main fears of regulating the payday lending industry too closely, experts say, is that with traditional lending sources such as high street banks tightening credit so much, barring payday lenders from operating in the UK will most likely result in driving those in need of financial assistance directly into the arms of illegal loan sharks.