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Payday lenders need to deliver on promise to check loans are affordable

15 Mai 2013

Research from Citizens Advice has found that 65% of people who take out a payday loan do not get asked questions to establish if they can afford to pay back the loan, as the Consumer Finance Association admits affordability checks are critical.

Citizens Advice Chief Executive Gillian Guy said:

“Payday lenders are sending people into a spiral of debt. Sixty-five percent of loans don’t come with checks to establish if borrowers can actually afford to repay them. This flies in the face of the lenders’ promise to make sure loans are affordable. Lenders need to stick to their word by actually asking people about their financial circumstances to stop them drowning in debt.

“For more and more squeezed households payday loans are a necessary way to get by on a tight budget. It is absolutely essential that there is more choice in the short-term credit market so people don’t have to resort to unscrupulous payday lenders. We want banks to offer a responsible version of a payday loan to address this gap.”

Notes to editors:

  1. The Citizens Advice service comprises a network of local bureaux, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
  2. The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  3. To find your local bureau in England and Wales, visit citizensadvice.org.uk. You can also get advice online at adviceguide.org.uk
  4. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers
  5. Citizens Advice Bureaux in England and Wales advised 2.3 million clients on 5.4 million problems from October 2013 to September 2014. For full 2013/2014  service statistics see our quarterly publication Advice trends
  6. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 3,000 service outlets across England and Wales.