Call for banks to meet payday loan demand

 

News that "almost half" of customers who take out a payday loan are happy with the experience has sparked calls for mainstream lenders to step into the breach and offer better products for customers.

Research from uSwitch.com found that 49 per cent of those who have taken out a payday loan say the experience was positive and one in three (30 per cent) would take one out again.

The research comes at a time when short-term loans companies are under increased scrutiny from the Office of Fair Trading, which wrote to 50 lenders demanding to know how they plan to realign their business practices with the law. The request prompted three such companies to relinquish their licenses immediately and a further 11 to say they would shift their focus to other types of lending.

Despite the headline satisfaction figure, this latest research also found that one in five said the loan made their troubles worse and 45 per cent think payday lenders should be banned.

In response, Citizens Advice said high street banks should step up to the plate by providing short-term, micro-loans to fulfil demand for these kinds of products.

"When things go wrong with payday loans, they really go wrong," said Gillian Guy, chief executive of Citizens Advice. "We see people who have been saddled with years of debt after taking out a single payday loan, as rollover fees and sky-high interest rates make costs balloon. Consumers need a responsible, short-term credit market they can engage with."

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