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Payday loans - CAS calls for an end to 'business as usual'

6 Mar 2013

Citizens Advice Scotland have backed the OFT’s latest action on payday loans, which includes a 12-week deadline for firms to stamp out unfair lending or lose their licence.

In backing this move, CAS have called for an end to ‘business as usual’ in the industry, and have also urged people who have taken out payday loans recently to contact them with information about their experience.

CAS spokesman Keith Dryburgh says,

“This is welcome news and we strongly support the OFT’s efforts. CAB evidence is very clear that the growth of payday loans in the last few years has seen a lot of irresponsible lending, which has led many families into the misery of un-manageable debt.

“For famiies who are struggling to make ends meet, payday loans can seem very attractive. But they have Interest Rates as high as 4,000%, and these have a huge impact on people who are on low incomes. We also find that many lenders are not being clear about their terms and conditions, are offering loans to people without proper assessment of their income, and are then pursuing debts aggressively.

“Last year the Scottish CAB service saw 50 new cases every day of people who had taken out a personal loan and were unable to keep up the repayments and have become stuck in a spiral of debt. So it is clear that the industry needs to clean up its act. ‘Business as usual’ is not an option.”

In November the payday loans industry introduced its own code of conduct that was supposed to eliminate irresponsible lending. CAS are monitoring the lenders on their adherence to this charter, and supporting consumers to take action if they have been unfairly treated. Keith Dryburgh says:

“Its really important that we get as much information as we can, so we can protect consumers from these unfair practices. If you have taken out a payday loan since 26th November last year, or if you know someone who has, please complete our quick survey (link no longer available) to find out if you have been treated fairly, and if not, we’ll help you take action.”

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