The BBC reported yesterday that payday lenders have “agreed to prevent a build-up of unmanageable debts by struggling customers.”
The changes will mean that lenders will “freeze charges and interest for borrowers in difficulty, no later than 60 days after they stop making payments. Borrowers would also have their charges frozen as soon as they managed to agree an acceptable repayment plan.”
The new measures should be in place by 25th July according to the trade bodies involved.
The move will, no doubt, offer some relief to the increasingly large body of people concerned about the payday loan industry and FundingKnight welcomes it. The payday lenders involved rightly point out that their new commitment goes beyond statutory regulation and gives new rights to customers.
That didn’t, however, stop Business Minister, Norman Lamb, suggesting people exercise caution:
“Payday loans should only ever be used as a short-term financial stop-gap, not as a long-term solution to financial difficulties”
The worry is that, unless positive action is taken to improve the state of funding for business, small businesses will be the next in line to take out a high cost, short term business loan.
We wrote yesterday about the latest BOE figures which reveal that business funding is in dire need of improvement. The popularity of payday loans only serves to underline the need for fast action and a considered approach to regulation.
FundingKnight strongly believe that more must be done to support funding for UK independents and provide the business investment required for growth and we believe, just as strongly, that the best way to do this is within the safeguard of regulating peer to peer lending.
Action is needed now. Our economy depends upon it.
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