New guidelines have recently been issued by the Consumer Finance Association which are going to help people be prevented from being ripped off by loan companies offering money on a payday basis. These new guidelines have been heavily criticised though by many consumer groups saying that the new regulations do not go anywhere near far enough to protect people from these generally unscrupulous companies.
Some popular payday lenders include QuickQuid and Wonga and the major consumer group Which? has stated that the guidelines that have recently been set out by the CFA simply do not go far enough to deal with the problem.
The amount of interest that is charged by these companies is extortionate and can lead to some people developing a huge amount of debt very quickly. There are some companies which charge up to 4000 percent interest in a single year and the new regulations are designed to make people more aware of the extreme interest rates which are sometimes seen with this type of loan.
The executive director of Which? is Richard Lloyd and he has recently stated, “These guidelines which have been set out by the CFA go nowhere near far enough and they are far below what we were expecting them to set out.”
10 proposals have been set out by the CFA and most importantly they say that the companies have to use clearer language in their advertising and agreement terms. They’ve also stated that these companies should never be encouraging people to borrow money if they don’t really need it.
A director at Consumer Focus, another consumer group, has stated, “We still have many concerns about the payday loan sector and these new measures are simply not robust enough to deal with the industry’s problems. We need to see more done to help consumers who are having repayment difficulties.”