A very special visitor was at the Scottish Parliament Thursday 12th December, as MSPs prepare to debate the dangers of payday loans.
Santa Claus himself joined Citizens Advice Scotland staff outside the front of the Parliament at 10.30am to help them launch their new poster campaign. The posters, which will be displayed from today at every CAB in Scotland, are designed to spread the message that payday loans can land people in crisis debt, and that other forms of credit are available.
CAS Chief Executive Margaret Lynch says,
“Every week now Scottish CAB advisers see over 100 people who have got into crisis debts to payday lenders. Many lenders charge huge interest rates, and in addition some also have terms and conditions which are not very clear and leave people having to re-pay much more than they can afford.
“A year ago the payday lending industry made some very specific pledges about how they would clean up their act. We recently we published an end-of-term REPORT CARD to show how they’d done. Sadly, many of them had broken those promises and were still operating in ways that left families struggling with problem debts.
“That report card was very disappointing. So we sent it to Santa and asked him to help us get the word out to people, to help them avoid the pitfalls of crisis debt. MSPs are discussing the issue today, which is why Santa is here - to help them spread our message to their constituents.”
That message is:
1. payday loans can often be a hugely expensive form of credit. They may seem very convenient but in fact they can leave you drowning in massive debts.
2. If you need to borrow money there are other types of loan available – like credit unions - which are much easier to repay.
3. And remember, you can get free expert advice from us about loan options and about managing any debts you already have. Contact your local CAB or call our national phoneline - 0808 800 9060.
Margaret Lynch continues,
“OFCOM reported this week that payday lenders had nearly 400,000 TV ads last year. That’s a rise of 64% on the previous year. Their ads are always very persuasive - especially at this time of year when people are trying to get some extra cash to give themselves and their families the best possible Christmas. So we want to make sure that people get this alternative message too.
“Santa and CAS both want people to have a great Christmas – but we also want them to have a 2014 that is free of crisis debt. They can do both by following our advice today. We just want people to be very careful before committing to any sort of loan, to think twice, always read the small print, and shop around for the cheapest option – just as you would when buying anything else.”
CAS REPORT CARD ON PAYDAY LENDERS
The CAS REPORT CARD on payday lenders in Scotland is available on our website at /news/payday-lenders-broken-promises-exposed. Our research shows that payday lenders in Scotland had broken almost all of the promises they made in their voluntary Code of Conduct last year. e.g.
- less than half are telling people that loans should not be used for long-term financial problems;
- only 1 in 3 are checking peoples’ financial background before giving them a loan;
- only 14% of customers felt the lender was sympathetic when they got into difficulties repaying the loan; and
- only a third of lenders are warning their customers about the dangers of roll-over loans.
Notes to editors - click to expand/collapse
Kezia Dugdale MSP, Motion S4M-08036. (to be debated at 12.30pm on Thursday 12 Dec)
That the Parliament supports the Financial Conduct Authority’s latest plans to regulate the payday loans industry as set out in its initial report on consumer credit; welcomes stricter requirements for payday lenders, which include a mandatory affordability check on borrowers, limiting the number of loan roll-overs to two and tighter restrictions on what payday lenders can say in adverts; considers that the payday lending sector represents an increasingly problematic issue in the Lothians and throughout the rest of Scotland; is concerned that advisors at Scotland’s Citizens Advice Bureaux (CAB) are seeing over a hundred people a week with payday loan related issues; notes that CAB provide advice to anyone who believes that they have been unfairly treated by a lender or who has problems with debt; considers it important that the lending industry is open and transparent and offers consumers a fair deal but also protects them from financial ruin, and believes that these proposals go some way toward beginning to address these issues.