UPDATE: 1 July 2014 – new rules from the Financial Conduct Authority (FCA) means that payday loan companies:
- cannot rollover an outstanding payday loan balance more than twice
- must send the debtor an information sheet with contact details for various debt advice organisations. A copy of this information sheet can be seen here
- cannot make more than two attempts to deduct money from a debtor’s bank account by means of Continuous Payment Authority (CPA) unless a rollover has been agreed.
- Must now include a prominent risk warning on all financial promotions.
Update 20th November 2012: The Office of Fair trading (OFT) is investigating several payday loan companies over aggressive debt collection practices. They will also contact all 240 payday lenders highlighting their concerns over their methods. Some of these companies risk enforcement action.
The OFT have made it clear to lenders what they expect from lenders when using continuous payment authority to recover debts and that they will not accept its misuse.
Recently we’ve noticed a spike in people downloading our continuous payment authority template. This is a form a person can use to revoke the right a company has to take money out of their bank account, to help stop payday loan companies taking their money.
Companies use continuous payment authority for on-going payments on things like gym memberships and magazine subscriptions, but the sheer number of people seeking help with their short term lending suggests payday loans may be the main culprit behind the demand.
The Office of Fair trading (OFT) is investigating several payday lenders over aggressive debt collection practices. They will also contact all 240 payday lenders highlighting their concerns over their dubious methods. Some of these companies risk enforcement action if they don’t change their ways.
The Sun recently said that 1 in 10 Brits are planning to take out a payday loan in the next six months. More than five million UK citizens have admitted they may need one to pay basic expenses such as utilities, replacing clothes and buying food.
More alarming is that many people are going without their basic needs – like food and heating – to pay these loans back.
Payday loan advice
If you’re worrying about a payday loan you could be feeling a whole range of emotions from regret to anger. But remember that the rules are the same as for high-street lenders: creditors always come second to your priority bills and living costs.
If you need more advice read and bookmark our five best payday loan-related articles:
- How to cancel a continuous payment authority – a step-by-step guide on how to cancel a payday lender’s authority to take money out of your bank account so you can offer lower payments. It’s easier than you may think!
- The payday loan trap: throwing good money after bad – clarity on what a payday loan involves and what you can do if you’re not getting anywhere with your payments.
- Don’t make the wrong decision when you need debt help – if you’re considering a payday loan to tide you over or pay a one-off expense like an MOT you need to weigh up your other options first.
- Targeted by payday loan spam texts – research shows that many people are inundated with these annoying automated texts offering payday loan deals that seem too good to be true. Trust us; they are!
- Avoid the payday loan headache altogether. – we all experience times where there’s a ‘tight spot’ in our budget and there’s too much month at the end of the money. This is usually the point you can give in to the seemingly quick fix of a payday loan. Be careful!
Perhaps you’re looking at our list and thinking, “Well, I need more help than this!”. After all, one payday loan can tip a person’s finances over the edge.
We’re here to provide all the support you need. Try out our online tool Debt Remedy and you could have long term debt advice in just 20 minutes.
Are you relying on payday loans to get by?