Are pay day loan companies drawing people into debt?
Are pay day loan companies drawing people into debt?
With concerns that some companies are lending irresponsibly Wales This Week have been putting lenders to the test. Watch the full story Monday at 8pm on ITV Cymru Wales.
The well-known expert in personal finance, Martin Lewis has backed Bethan Jenkins' Financial Education Bill. He said:
I've been campaigning for years to ensure we educate our children to live in this competitive consumer economy - so it's great news that there's now a Bill being planned that looks to build upon compulsory financial education already offered in Wales. We need to ensure our children are equipped both to deal with dangers like payday loans, temptations like impulse spending, and planning a stable future for mortgages and, yes even one day, pensions.
– Martin Lewis, MoneySavingExpert.com
Wales was already one step ahead of England in introducing compulsory financial education. However, this Bill demonstrates that policy makers in Wales are not prepared to sit on their laurels and want to push it another step forward. Music to my ears.
An Assembly Member has been setting out a potential new law that she hopes will help tackle the rising reliance on payday loans companies. Bethan Jenkins will introduce a backbench Financial Education and Inclusion Bill in the Senedd tomorrow.
If it wins support from other AMs, the bill would lead to more financial education in schools and later in life. It would also look at what more local councils could do, for instance in preventing access to payday lenders' websites on authority-owned computers.
Bethan Jenkins has praised existing financial education in schools, but says more can be done.
– Bethan Jenkins AM, Plaid Cymru
When I have debt management charities telling me that three in five people who go to see them with a loan they can’t afford to pay cannot even read their own bank balance sheet, I believe we as an Assembly just need to be doing a great deal more to end this. I see this bill as a way of opening up a far wider debate about debt management in our society, and believe that legislation that helps end the problems we are seeing will be all the better for everyone’s input.**
Plans to tackle payday lenders is being discussed in the Senedd today.
There has been a call for legislation to protect people who fall victim to short-term high interest loans.
Assembly Member Bethan Jenkins says the law would improve financial education in schools if the bill is passed.
Huw Lewis AM, Communities and Tackling Poverty Minister, says more should be done to promote alternatives to payday loans.
Mr Lewis was appointed Communities and Tackling Poverty Minister in March this year. He is currently reviewing the Welsh Government's plans for tackling poverty, which include extending networks of credit unions and advice services.
There are currently 34 credit union offices and 256 collection points across Wales.
Pay day loan companies are popping up all over the country with a barrage of advertising on TV, online and in our newspapers. As the full impact of the UK Government's welfare reforms start to kick in I am very concerned that more and more people will be tempted by these loans to make ends meet.**
The Welsh Government is committed to taking action to protect vulnerable people and I call on all UK governments to support this OFT initiative.**
– Huw Lewis AM, Communities and Tackling Poverty Minister
Of particular concern is the evidence that many payday lenders do not comply with basic compliance requirements, such as assessing the affordability of a loan for an applicant. This squeezes more responsible lenders out of the market and allows unscrupulous ones to take advantage of people who are often in dire financial situations.**
Action needs to be taken against payday loan companies as welfare reforms begin to bite, according to Communities and Tackling Poverty minister Huw Lewis AM.
Mr Lewis has submitted evidence to a consultation being carried out by the Office of Fair Trading (OFT) who want to refer the payday loan market to the Competition Commission.
OFT research found "a concerning picture of the UK payday lending market" and Mr Lewis said he has "deep concern" about the impact on communities.
Payday loan firm Yes Loans has had its licence revoked after using "deceitful and oppressive business practices", the trading watchdog said today.
Yes Loans, based in Cwmbran, arranged expensive short-term loans for some consumers rather than the products they were initially asking about and misled consumers into believing it was a loan provider rather than a credit broker, the Office of Fair Trading (OFT) found.
The company used "high pressure" sales tactics to get consumers to give their card details on the false premise that they were needed for security checks, said the OFT
It also took brokerage fees without making it clear that a fee was payable and sometimes did this without customers' consent.
– Yes Loans Ltd, Blue Sky Personal Finance Ltd and Money Worries Ltd
We have all worked tirelessly to implement significant and fundamental advancements to the businesses. We are disappointed that the OFT has decided to revoke the licences of three long standing businesses, which provide services to many thousands of satisfied customers.