New payday lenders’ code of practice welcomed, but must go further

National debt advice charity Debt Advice Foundation has welcomed the new code of practice for the payday and short-term loan industry, but warned that the Government must find a way to tackle the worst offending payday lenders who are not signed up to the code. 

National debt advice charity Debt Advice Foundation has welcomed the new code of practice for the payday and short-term loan industry, but warned that the Government must find a way to tackle the worst offending payday lenders who are not signed up to the code. 

Managing Director David Rodger said: “It is absolutely imperative that sympathetic handling of defaulting borrowers is widely adopted throughout the industry.  We’ve seen how late payment charges and rolling-over can quickly turn a relatively small and manageable loan into a large, uncontrollable liability.  We also strongly believe that appropriate credit checks need to be carried out by the lenders as they have a responsibility to verify whether or not the applicant can afford the loan and that it is for a suitable purpose.  Pressure must be kept up to ensure that standards do not slide. 

“We are pleased to see that the Government will continue to take a “strong interest” to ensure the public are properly protected.   On our part, we will continue to push for payday lenders to signpost applicants who are seeking inappropriate loans to debt advice charities, and for restrictions to be placed on marketing campaigns which suggest inappropriate uses for short-term, high interest loans.”

For more information on the new code of practice, go to: http://news.bis.gov.uk/Press-Releases/Better-help-for-consumers-in-financial-difficulty-from-payday-loans-67a77.aspx