68% of the British population want stricter regulation on advertising of payday loans, according to new research by insolvency trade body R3.
Meanwhile, 65% of those surveyed think there should be a cap on the total cost that can be charged for credit. Only 7% of GB adults do not think there is a problem with current ‘payday loan’ lending.
“With their sophisticated TV advertising it’s hard to avoid the lure of the ‘quick and easy’ payday loan, yet nearly 93% believe regulation is now needed,” said Louise Brittain, R3 Council member. “Topping public concern is advertising of payday loans, and the need to give a clearer indication about the total cost of the debt.
“Like the public, our members believe there should be greater regulation of the payday loan industry, particularly of advertising with prominent ‘health warnings’ included about the actual cost of the loan. There should also be greater clarity on the size of the ‘payday loan’ industry using a real time register.”
The prevalence of payday lenders comes at a time of increasing financial stress, with 54% the GB population now worrying about their levels of debt (up from 39% last quarter) and 51% say they struggle to payday. One in 10 now struggle to payday as a result of making payments on a ‘payday’ or other short-term loan, R3 said.
8% say they are likely to take out a payday loan in the next six months, up from 3.5 million GB adults six months ago. 28% currently have no savings.
Brittain added: “I am extremely concerned that so many are considering taking out a payday loan as a way of addressing debt concerns. If this was taken just as a one-off and paid back immediately then it could work – but our research tells us this tends is not always the case and there could well be merit in exploring a cap on the number of ‘roll-over’ loans that can be taken.
“For many, a payday loan will simply pile up the debt, and 60% of those who took a payday loan regret doing so. Before going down that route, I would urge those with debt concern to draw breath and consider all their options and ideally seek advice from an expert.”