Twice as many people now seeking help with payday loan debts

Average debt of those in trouble was £1,657, up from £1,267 in 2011

The number of desperate people seeking urgent debt help after borrowing from a payday lender doubled last year.

Debt charity StepChange helped 36,413 people with payday loan debts in 2012, some 20,000 more than the previous year.

But there were not only more than twice as many worried debtors, the amount they owed also climbed considerably. The average debt of those in trouble was £1,657, up from £1,267 in 2011.

The charity warned that people are being left in a position where monthly repayments would leave them with no money for living expenses and push them further into a spiral of indebtedness.

Worse, the charity said it believes that the dramatic growth in the numbers seeking help is evidence that loans are being made to people who are unable to afford to repay and forces many people into an unsustainable cycle of dependency on payday loans.

In one instance the charity was contacted by a couple with 36 payday loans between them.

Delroy Cornaldi, StepChange’s director of external affairs said: “These findings are yet more evidence of the scourge of payday loans. With household finances increasingly under extreme pressure and access credit far less available, many face the unenviable choice of using payday loans simply to make ends meet.

“While recent actions by the Office of Fair Trading (OFT), including the revocation of a lender’s licence and the proposed referral of the industry to the Competition Commission, are welcome news for consumers, there are still widespread problems across the payday loan sector.”

However several promising signs that the battle to control rogue payday lenders is growing have emerged.

The OFT said it has now contacted the UK’s 50 biggest payday lender firms it has identified had problems. The regulator investigated the firms over a 12-month period and published a damning report in March which revealed evidence of widespread, irresponsible lending and lenders failing to comply with the standards required of them.

It proposed to refer the payday lending market — where short-term loans are charged at APRs higher than 4,000 per cent — to the Competition Commission after it discovered evidence of deep-rooted problems in how lenders compete with each other.

The regulator has threatened the firms with losing their licence if they failed to meet strict new guidelines. A spokesman said: “The OFT has now written to all of the 50 payday lenders that were inspected during the compliance review. The letters required those lenders to demonstrate they are trading in compliance with their legal obligations. Any lender that fails to demonstrate this to our satisfaction risks losing its licence.”

The OFT revealed that it has begun formal investigations into the practices of three payday lenders, although it refused to name them.

The regulator recently revealed that three payday lenders have had their licences revoked and one other has surrendered it licence since publication of the OFT’s review of the sector in March.

But The Independent’s own research on the OFT’s Consumer Credit Register has shown that two more firms have surrendered their licence in the last two weeks, after being contacted by the OFT.

However one – Paydayloan.co.uk – still appeared to be in business last night even proudly claiming on its website that it: “has been around since 1998, making it the longest running UK payday loans company!”

The firm – which is based in Slough High Street - surrendered its licence last Thursday 2 May which means it has been outlawed from doing business since then.

The other firm which surrendered its licence on 25 April was Liverpool-based Anfield Cheque Cashing Centre.

The Independent was unable to contact either firm to find out why they have surrendered their licences but the OFT confirmed that the companies were among the 50 investigated by the regulator.

News
Snoop Dogg pictured at The Hollywood Reporter Nominees' Night in February, 2013
people... says Snoop Dogg
News
i100
Life and Style
fashion Designs are part of feminist art project by a British student
Life and Style
food + drinkZebra meat is exotic and lean - but does it taste good?
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
Residents of Derby Road in Southampton oppose filming of Channel 4 documentary Immigration Street in their community
tv
News
i100
Extras
indybest
Sport
Scottish singer Susan Boyle will perform at the Commonwealth Games opening ceremony in Glasgow
commonwealth games
News
Lane Del Rey performing on the Pyramid Stage at Glastonbury 2014
people... but none of them helped me get a record deal, insists Lana Del Rey
Arts and Entertainment
Dwayne 'The Rock' Johnson stars in Hercules
filmReview: The Rock is a muscular Davy Crockett in this preposterous film, says Geoffrey Macnab
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
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 General

IT Portfolio Analyst/ PMO

£40000 - £50000 Per Annum Excellent benefits: Clearwater People Solutions Ltd:...

Systems Analyst (Technical, UML, UI)

£30000 - £40000 Per Annum + excellent benefits: Clearwater People Solutions Lt...

Cost Reporting-MI Packs-Edinburgh-Bank-£350/day

£300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...

Senior Private Client Solicitor - Gloucestershire

Excellent Salary: Austen Lloyd: Senior Private Client Solicitor - We are makin...

Day In a Page

Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

Noel Fielding's 'Luxury Comedy'

A land of the outright bizarre
What are the worst 'Word Crimes'?

What are the worst 'Word Crimes'?

‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
Can Secret Cinema sell 80,000 'Back to the Future' tickets?

The worst kept secret in cinema

A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Facebook: The new hatched, matched and dispatched

The new hatched, matched and dispatched

Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
Why do we have blood types?

Are you my type?

All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
Honesty box hotels: You decide how much you pay

Honesty box hotels

Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit
Commonwealth Games 2014: Why weight of pressure rests easy on Michael Jamieson’s shoulders

Michael Jamieson: Why weight of pressure rests easy on his shoulders

The Scottish swimmer is ready for ‘the biggest race of my life’ at the Commonwealth Games
Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn