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
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs General

Recruitment Genius: Head Chef

£22000 - £25000 per annum: Recruitment Genius: This Garden Centre complex base...

Recruitment Genius: Buyer

£36000 - £38000 per annum: Recruitment Genius: A Buyer is required to join thi...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree Group have been well esta...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45000: SThree: SThree Group have been well es...

Day In a Page

Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

US betrayal of old ally brings limited reward

Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
VIPs gather for opening of second Suez Canal - but doubts linger over security

'A gift from Egypt to the rest of the world'

VIPs gather for opening of second Suez Canal - but is it really needed?
Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
The male menopause and intimations of mortality

Aches, pains and an inkling of mortality

So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

'How can I possibly be on the list with these writers I have idolised?'

Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

Bettany Hughes interview

The historian on how Socrates would have solved Greece's problems
Art of the state: Pyongyang propaganda posters to be exhibited in China

Art of the state

Pyongyang propaganda posters to be exhibited in China
Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

Vegetarian food gets a makeover

Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks
The haunting of Shirley Jackson: Was the gothic author's life really as bleak as her fiction?

The haunting of Shirley Jackson

Was the gothic author's life really as bleak as her fiction?
Bill Granger recipes: Heading off on holiday? Try out our chef's seaside-inspired dishes...

Bill Granger's seaside-inspired recipes

These dishes are so easy to make, our chef is almost embarrassed to call them recipes
Ashes 2015: Tourists are limp, leaderless and distinctly UnAustralian

Tourists are limp, leaderless and distinctly UnAustralian

A woefully out-of-form Michael Clarke embodies his team's fragile Ashes campaign, says Michael Calvin
Blairites be warned, this could be the moment Labour turns into Syriza

Andrew Grice: Inside Westminster

Blairites be warned, this could be the moment Labour turns into Syriza
HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

The mystery of Britain's worst naval disaster is finally solved - 271 years later

Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

'I saw people so injured you couldn't tell if they were dead or alive'

Nagasaki survivors on why Japan must not abandon its post-war pacifism
Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

The voter Obama tried hardest to keep onside

Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen