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Crackdown on payday loan companies welcomed by debt advisers
A CRACKDOWN on payday loan companies will make a real difference to borrowers, debt advisers have claimed.
Staff at both Bournemouth and Poole Citizens Advice Bureaux welcomed the news that the payday lending industry was going to be subject to tougher regulation.
The Financial Conduct Authority wants all borrowers to have an affordability check before being given a loan and is proposing a limit on the number of times loans can be extended. They also want to put risk warnings on adverts and marketing material.
Samantha Whiting, the manager of Bournemouth CAB, said: “The announcement is great news which could make a real difference to borrowers.”
They dealt with 318 debt-related enquiries between July and September, of which four per cent were due to payday loans.
And Judy Herring, of Poole CAB, said: “For the majority of our debt clients, payday lenders are usually a last resort once they have exhausted every other avenue available to them. Most will have bad credit ratings and be on very low incomes. The extremely high interest rates charged by payday lenders mean they struggle to repay even small amounts of borrowing and these loans are then rolled over and grow exponentially.
“We would always recommend borrowers consider their options carefully and as an organisation would support the local credit unions.”
The new regulations have also been welcomed by James Benamor, CEO and founder of Bournemouth-based Amigo Loans. He said: “These payday predators target the most vulnerable out there and until now they’ve been allowed to get away with it.”
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