The problem with payday loans
The payday loan industry, in its heyday worth an estimated £2.5 billion, has been heavily affected by the new FCA regulations restricting the interest they can charge to 0.8% per day.
Payday loans, although a supposedly quick and convenient solution, come with huge interest rates if not paid back swiftly. They can mean an individual falling into a cycle of debt, never quite managing to pay the loan off, or using them repeatedly to mask other problems they might have such as a gambling addiction or a problem with managing their finance and budgeting.
Effective budgeting can be a useful tool, sitting down and analyzing where money is being spent, how much is being spent and categorizing into essential and non-essential spending can be a good starting point.
Is the debtor claiming all the benefits they are entitled to? Has there been a change in their circumstances and, therefore, a change in entitlement? This can have a huge impact, especially if there has been a breakdown in relationships and there are children involved.
There is also the issue with Universal Credit and the long waiting times for the application to be processed which can take up to six weeks.
Masking of bigger issues
The instantaneous nature of payday loans makes them popular with people who need a quick fix. The time from application to the money appearing in their bank account can be under ten minutes.
To those with a gambling, drug or alcohol addiction, this can mean the individual concerned is able to have the money to enable their addiction with extreme speed.
Payday loan companies advertise their services during the day and on the radio and it can be difficult to avoid the temptation if it surrounds you.
Recognising vulnerability in its many forms is important and we train all our staff, both enforcement agents and customer support staff, to understand the signs and triggers and inform creditors if we suspect that a debtor is vulnerable.
Our ‘Quality Marked’ training is available to local authorities, government organisations, law firms and the third sector.
Free vulnerability workshop for local authorities
We are currently offering our CILEx endorsed Vulnerability Mental Health & Awareness Workshop free to local authorities. To find out more visit our training information.
Alternatively, send us a contact request to book this workshop.