A payday loan company that encouraged individuals to borrow money to celebrate the Queen’s Diamond Jubilee has been called “irresponsible” by a debt advice charity.
Payday Bank had published a blog that appeared to urge customers to apply for short-term, high-interest credit to extend their Jubilee celebrations. The move caused outrage among those campaigning for tighter regulations to be imposed on the payday loans industry.
The blog, which was removed soon after journalists contacted the lender about its content, suggested that people make the most of the extended weekend by throwing a party, making bunting and heading to the London pageant. Payday Bank subsequently claimed that the blog had been written by a third-party agency.
On Payday Bank’s website it states that a £300 loan would accrue interest of £75 if it was taken out and fully paid back within a 28 day period. This loan would be subject to APR of more than 1,730%. However, the lender’s blog was tagged with search terms such as “ways to save money”, which is clearly misleading in the circumstances.
Third Party
Payday Bank claimed the blog had been written by a third party, but the company did concede that it failed in its duty as a responsible lender to provide acceptable content on its website. The firm has promised to review the incident.
Since the blog was removed, Payday Bank has stated that its loans should only be used in emergencies. An emergency may include having to pay for vehicle repairs or a broken central heating boiler, but debt advice charities advise consumers to steer clear of payday loans even during times of emergency.
Consumer Credit Counseling Service (CCCS), a debt advice charity, spoke out against the blog but claimed it was not surprised as similar entries are usually released in the run-up to Easter, Christmas and Valentine’s Day.
A spokesperson for the charity questioned the moral fiber of payday loan companies, stating that most would do anything to lure customers into debt.
CCCS advised people to take into account the fact that payday loans are an expensive way to gain access to extra cash. They said that people who require payday loans are usually in a vulnerable position, which is why many struggle to pay back the cash. Once interest and late payment fees are applied, a small loan quickly becomes unmanageable.
The debt charity advised people who were thinking of taking out a high-interest loan to reconsider their position. Certainly in the case of the Jubilee celebrations, buying more beer and bunting is no justification for taking out a potentially costly payday loan.
Payday Loan Victim
Steve Parry is one of many borrowers who found himself in financial difficulty after taking out a payday loan. People can be approved for these loans online in just a matter of minutes. Mr Parry racked up debts of £22,000 in just over eighteen months by taking out sixty-four loans from twelve different providers. He claims that payday loan companies target the vulnerable, insisting that the Jubilee advertising could have made people think they were missing out.
Like the CCCS, Mr Parry feels that national events and holidays are being exploited by unscrupulous payday loan providers. An active campaigner for tougher regulatory control of the payday loans sector, he claims to have witnessed many similar campaigns aimed at encouraging customers to borrow for non-emergency purposes.
Legal Loan Sharks
Labour MP Stella Creasy echoed Mr Parry’s opinion by claiming self-regulation alone is not enough for payday loan companies. Mrs Creasy is petitioning for capped credit costs in the loans market, claiming people can’t trust payday loan companies to put the interests of consumers first. The politician has implored the government to review the payday loans industry as a matter of urgency.