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.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksNow available in paperback
Arts and Entertainment
The Apprentice candidates Roisin Hogan, Solomon Akhtar, Mark Wright, Bianca Miller, Daniel Lassman
tvReview: But which contestants got the boot?
Arts and Entertainment
Jim Carrey and Jeff Daniels ride again in Dumb and Dumber To
filmReview: Dumb And Dumber To was a really stupid idea
News
people

Jo from Northern Ireland was less than impressed by Russell Brand's attempt to stage a publicity stunt

Sport
Scunthorpe goalkeeper Sam Slocombe (left) is congratulated by winning penalty taker Miguel Llera (right)
football
Life and Style
A woman walks by a pandal art installation entitled 'Mars Mission' with the figure of an astronaut during the Durga Puja festival in Calcutta, India
techHow we’ll investigate the existence of, and maybe move in with, our alien neighbours
Arts and Entertainment
Sir Ian McKellen tempts the Cookie Monster
tvSir Ian McKellen joins the Cookie Monster for a lesson on temptation
News
i100
Travel
Tourists bask in the sun beneath the skyscrapers of Dubai
travelBritish embassy uses social media campaign to issue travel advice for festive holiday-makers in UAE
Arts and Entertainment
Jennifer Saunders stars as Miss Windsor, Dennis's hysterical French teacher
filmJennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress
Life and Style
tech
Sport
Nabil Bentaleb (centre) celebrates putting Tottenham ahead
footballTottenham 4 Newcastle 0: Spurs fans dreaming of Wembley final after dominant win
Life and Style
Sebastian Siemiatkowski is the 33-year-old co-founder and CEO of Klarna, which provides a simple way for people to buy things online
tech
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

Ampersand Consulting LLP: Virtualisation / Cloud Infrastructure Engineer (VMware, Cloud)

£38000 - £44000 per annum + Bonus and Benefits: Ampersand Consulting LLP: Virt...

Recruitment Genius: Senior Android App Developer

£30000 - £40000 per annum: Recruitment Genius: This company specialises in the...

Ashdown Group: Helpdesk Analyst

£25000 per annum: Ashdown Group: An established media firm based in Surrey is ...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Day In a Page

Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

'No abs Adam' plans to muscle in on Usain Bolt's turf

After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum