Payday lenders to share 'real time' information on consumers as research reveals nearly one million people took a loan in 2013

 

Payday lenders including Wonga are set to start using a new “real-time” information sharing service about consumers' to stop people taking out multiple loans from different services.

The news comes as research from Shelter estimates nearly one million people have taken out a payday loan in the last year to help cover their rent or mortgage costs.

The housing charity said that one in 50 (2 per cent) people it surveyed had taken out a short-term loan, which would equate to nearly 885,000 adults if the findings were projected across Britain.

Shelter said it dealt with just under 9,000 calls to its helpline from people struggling to pay their rent or mortgage last year, rocketing by one third (32 per cent) on the total for 2012.

Liz Clare, a helpline adviser for Shelter, said: "Times are tough, and we often hear from people who've reached crisis point because they haven't felt able to ask for help earlier."

The new information service for payday lenders is being launched by credit reference agency Callcredit to tackle concerns that lenders should have the most up-to-date and accurate snapshot of a potential borrower's circumstances when they make a loan request.

The agency said the initiative will have a "major positive impact for both lenders and consumers".

The move comes after the Business, Innovation and Skills (BIS) Committee called in December for better sharing of up-to-date information between payday firms so they can stop struggling borrowers from spiralling into further trouble by taking out multiple loans with different lenders.

Earlier this week, consumer group Which? accused payday lenders of "exploiting" customers who default on loans with over-the-top fees that raise the risk of them spiralling further into debt.

Wonga's default fee of £30 was found to be the highest in the Which? research of 17 payday firms. Wonga said the fee is set out clearly and reflects the extra costs it incurs when someone fails to pay their loan back on time.

Lenders will begin testing the new information system in April, with the aim of it being used to help enable more accurate lending decisions from early May.

The new service will include information such as whether payments have been received as expected, any rollovers to loans and and extensions to credit or changes to payment terms.

Callcredit said that although much interest in the initiative has come from short-term payday lenders, it will not just benefit this sector and there has also been an appetite for it from the "mainstream" lending industry.

Any lender that contributes to the initiative will be able to access it and consumers will also be able to see it included in credit reports.

Peter Mansfield, managing director of Callcredit Limited, said: "The lending landscape has changed considerably over recent years.

"There is a growing consensus that the availability of more frequent data-sharing is required to ensure responsible lending in certain sectors."

The whole payday lending industry is being investigated by the Competition Commission following concerns raised that some lenders appear to have been basing their business models around borrowers who cannot afford to pay back their loans on time.

Additional reporting agencies

Start your day with The Independent, sign up for daily news emails
News
peoplePair enliven the Emirates bore-draw
Arts and Entertainment
tvPoldark episode 8, review
News
Britain's opposition Labour Party leader Ed Miliband (R) and Boris Johnson, mayor of London, talk on the Andrew Marr show in London April 26
General electionAndrew Marr forced to intervene as Boris and Miliband clash on TV
Arts and Entertainment
Ramsay Bolton in Game of Thrones
tvSeries 5, Episode 3 review
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence