LONDON, U.K. -- You may have noticed a few stories in the press recently surrounding the government's growing concern about how payday loan providers conduct their business. It is feared that some unscrupulous institutions are exploiting the desperation of consumers as the economic downturn continues to bite. All payday loan providers were given warning in January that they had to change their ways or face the prospect of formal legislation. What will these proposed clampdowns mean to you? And how might you use them to your advantage?
What Does the Proposed Government Clampdown Entail?
The headline proposals put forward by the British government include the limiting of TV adverts and the forcing of lenders to clearly display their interest rates. The main fear is that payday loan providers are tailoring their advertising to the country's most vulnerable people, as well as promoting the service as a cheap and quick way of accessing cash. It has been suggested that the Advertising Standards Authority will be used to police the new rules, and lenders could face steep fines if they fail to adhere to them.
The Office of Fair Trading recently carried out a number of audits on the UK's main payday loan providers, and their recommendations ranged from restricting access to advertising forums to ordering the reimbursement of people who have been treated unfairly. The government's clampdown has resulted in the creation of the Financial Conduct Authority (FCA) - the body responsible for monitoring lending practices and enforcing the new guidelines.
Payday loan providers have been accused of failing to carry out stringent checks before issuing loans, so they will be called upon in future to share information about their loans with competitors - a move that is designed to stop people from acquiring several loans in a short period. These institutions are also under enormous pressure to cap lending to individuals, and the government is expected to introduce legislation forcing them to do so if action is not taken voluntarily.
What All of This Means to You
The main aspect of the clampdown centres on misleading advertising, so you should, in future, be given the most realistic interest rate possible. If you believe you have been treated unfairly or even lied to - you will also be able to take your case to the ASA, or from 2014, the FCA. The Money Advice Trust received a record 20,000 complaints about aggressive collection techniques and hidden charges in 2012, so this opportunity to bring lenders to account could protect you from unscrupulous lending practices in the future.
The new regulations are designed to stop lenders from making excessive profit on the back of your financial hardship. However, some lenders are expected to either bend the new rules or completely ignore them altogether. If you're nervous or unsure of tackling lenders yourself, you can now get help with payday loans from an experienced debt adviser.
Asking for debt help is often seen as a sign of failure, but if you can’t pay payday loans because of changing circumstances, asking for help should be looked upon as a constructive way of tackling the problem. An experienced adviser will be able to explain the rule changes in detail, and in many cases, use them to lift the burden of payday loan debt.
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1st Point Debt Solutions is a team of experienced specialist advisors. Dealing directly with creditors, 1st Point Debt Solutions provides its clients with debt management plans and helps with the implementation.
