Friday 5 October 2012

Are UK payday lenders breaching EU irresponsible lending rules?

Are UK payday lenders breaching EU rules on irresponsible lending and if so what does this mean for consumers?  Govan Law Centre publishes a brief thought paper by Mike Dailly examining the 2010 Consumer Credit (EU Directive) Regulations introduction of section 55A and 55B to the Consumer Credit Act 1974. 

GLC and our partners have seen increasing examples of how the need for small, short term loans are being ruthlessly exploited by payday lenders to the detriment of our clients and communities. Households have become entrapped in impossible cycles of indebtedness with monthly default, roll over and eye watering usury interest rate charges.

Often the result of such expensive indebtedness is enforced poverty, personal hardship and threatened homelessness as clients cannot pay their rent or mortgage or buy household groceries as payday lenders hoover money and charges from their bank accounts each month. GLC believes this is unfair, unethical, and against the public interest.

GLC is in the process of actively challenging the right of payday lenders to recover their fees and charges on behalf of our clients and will share any developments in due course.  


1 comment:

  1. I know the interest rates are sky high but the cold, hard truth is that the people who go to these payday lenders are the working poor. They do not have the credit for a traditional loan and do not have credit cards. Payday lenders are the only people who will lend them money. It is difficult to "live below your means" when there are no alternatives. There are car repairs, utility bills, and groceries. Sometimes these lenders are a poor persons only option.