Over-regulation of the payday loans market may force reputable lenders to abandon the practice and force the most vulnerable into the arms of loan sharks, a trade association has said.
Russell Hamblin-Boone, chief executive of the Consumer Finance Association (CFA), which represents short-term lenders warned against introducing too many rules to curb the industry's controversial practices:
– Russell Hamblin-Boone
The industry has already changed significantly for the better and short-term lenders are now leading the way through initiatives such as real-time credit checks.
However, over regulation is a real risk. Lenders are facing the prospect of a Government price control before the full impact of new regulations is known.
Borrowers consistently tell us how much they like and value short-term credit but if the regulator turns the screw too far and drives reputable lenders out of the market, these borrowers will be forced to look for credit elsewhere and this creates a perfect market for illegal lenders.