So whilst you provide key information such as employment and bank details you have no way of knowing who is behind the website. No company name, no company registration number, no address. I would like to know how this company got my email address as I certainly wouldn’t have given anyone permission to use it for such a scam.”
These legal loan sharks are able to use the power of the internet to get to many people, simply and easily. The more venerable consumers will see these offers as an opportunity to raise some cash without really appreciating the consequences.
The body which represents short-term lenders, the Consumer Finance Association (CFA), recently stated to MP’s in Parliament that borrowers are “intelligent, financially-savvy consumers”. And whilst the Office of Fair Trading (OFT) is threatening to put the country’s biggest payday lenders out of business it is unlikely to quell the rapid creation of lenders looking to take advantage of the indebtedness of many of the UK’s population.
This industry has to be regulated and quickly. The current economic climate is really hurting the consumer with average household debt (excluding mortgages) rising again in March after falling since 2009. According to Credit Action average household debt currently stands at £5,980. So the temptation to take out a simple ‘temporary’ loan is likely to be significant. However it is expensive with charges and high rates and if you can’t pay it back in the allotted days agreed the trouble really starts as the lender looks to get back their funds. Without regulation the payday lenders can use any method to recover their funds and all the time the debt is increasing.
Unfortunately the Financial Conduct Authority (FCA) which has replaced the discredited Financial Services Authority (FSA) has recently said that they are unlikely to use their new powers to cap interest rates and restrict availability as they believe it is limiting choice for consumers and will mean that some are unable to get credit at all causing a far greater problem. Who are we kidding here? We cannot let people get further and further into debt without providing some form of respite and an opportunity to get out of their spiralling debt issues.
MyMoneyPA is calling for greater regulation and transparency on who is operating in this field with a minimum set of company data being mandatory so the companies operate in an open and accountable way. Additionally their full process including fees, interest rates and any additional charges for recovering debt should be stated in their published terms and conditions.