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Payday lenders should be competing on cost of credit, not speed

14 Awst 2013

Citizens Advice argues that payday lenders must compete on the cost of credit, not speed, as the Competition Comission releases its statement of issues for the payday lending market investigation.

Citizens Advice Chief Executive Gillian Guy said:

“For consumers to have real choice, payday lenders should compete on the actual cost of a loan, not focus on how quick they can get cash into people’s bank accounts. The Competition Commission is right to look at the issue of lenders competing on the speed of a loan.

“We’re concerned that the emphasis on speed means checks are overlooked; 64% of payday loans customers say their lender didn’t assess if they can afford to repay their loan. This is risky and can land consumers with loans they’re unlikely to ever repay.

“The current squeeze on living standards means that sometimes people need a bit extra to cover emergencies. Payday lenders know they have a customer base with little choice of other forms of credit, which is why it is essential problems in the industry are addressed in order to create a responsible short-term credit market.”

Throughout August Citizens Advice is running a campaign #paydaywatch urging consumers to fight back against unscrupulous lenders. Citizens Advice found that three in four payday borrowers who got advice from the charity’s consumer service had been treated unfairly by their lender and could have grounds for an official complaint to the Financial Ombudsman Service.

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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.