Is this the ethical way for payday lending?
Sunday 24 June 2012
An ethical, payday loan may sound like a contradiction, but that is what new provider fridayfriday.com says it is offering.
The web-based lender promises to limit the use of controversial "rollover" loans, where borrowers are given a new loan as soon as an old one ends, to cap the annual percentage rate and take a less aggressive approach to debt collection.
"We charge £25 for each £100 loaned a month, but the maximum number of loans that someone can take out is limited to three consecutively. We then put the borrower on a single loan, charging 30 per cent over six months," says Jason Gardiner, the founder of FridayFriday.
"It is not in our interests to put borrowers into difficulty by loading on the fees. In addition, bad debtors are given weekly reminders rather than hassled at work or on their doorstep."
But this hardly qualifies fridayfriday as an "ethical" provider, according to the UK's biggest debt charity.
"While limiting the number of times that someone can rollover a payday loan to three is a good step, this is still extremely expensive credit, particularly when you can borrow up to £1,000 each time," says Una Farrell of the Consumer Credit Counselling Services. "Paying 30 per cent interest on £1,000 is very steep, especially for someone who is in financial difficulty." .
The Office of Fair Trading is investigating the payday industry, following revelations about sales tactics . Lenders have been criticised by consumer groups for targeting the young and vulnerable, while the credit reference agencies are unhappy that payday lenders are not fulfilling their statutory obligations to let them know when people are building up debts. This means borrowers can slip into serious debt without this being logged on their credit record.
"The industry has a bad name and rightly so," admits Mr Gardiner. "We need tight regulation of lenders by the Financial Services Authority and lenders must pass on the details of new loans to the credit reference agencies," he adds.
Authorities failing in hunt for 'most wanted' tax dodgers who owe HMRC £844m
Buyers beware of new-build home headaches
Child Maintenance Service to replace Child Support Agency - but is it better?
Bargain Hunter: Kit yourself out in sports gear - at a healthy discount of up to 75%
The 10 Best money-saving sites
- 1 Miley Cyrus' homeless MTV VMAs date, Jesse Helt, is wanted by the police
- 2 Arizona shooting: Gun instructor accidentally killed by nine-year-old girl with Uzi
- 3 Paul Scholes: Manchester City were so good against Liverpool I felt like turning the television off
- 4 Notting Hill Carnival: Woman shares selfie after being ‘punched in face for telling man to stop groping her’
- 5 Homer Simpson has taken the ALS ice bucket challenge because of course he has
Exclusive: We share blame for creating 'jihad generation', says Muslim strategist
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
Scottish independence TV debate: Pumped-up Alex Salmond bounces back in bruising second round against Alistair Darling
Do you realise just how foolish the UK looks?
Arizona shooting: Gun instructor accidentally killed by nine-year-old girl with Uzi
- < Previous
- Next >
iJobs Money & Business
£40000 - £48000 per annum + benefits+bonus+package: Harrington Starr: C# Devel...
£45000 - £60000 per annum + benefits+bonus+package: Harrington Starr: C# Swift...
Negotiable: Harrington Starr: A fast growing Financial Services organisation b...
£50000 - £60000 per annum + excellent benefits: Harrington Starr: An award-win...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony