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.

Arts and Entertainment
The first film introduced Daniel Radcliffe to our screens, pictured here as he prepares to board the train to Hogwarts for the first time.
booksHow reading Harry Potter helps children grow up to be gay-friendly
Sport
Frank Lampard will pass Billy Wright and equal Bobby Charton’s caps tally of 106 caps against
sportFormer Chelsea midfielder in Etihad stopgap before New York contract
Arts and Entertainment
A scene from Aladdin is performed at the Tony Awards in New York in June
theatreBrit producer Lythgoe makes kids' musical comedy a Los Angeles hit
Sport
Usain Bolt of Jamaica smiles and shakes hands with a competitor after Jamaica won their first heat in the men's 4x100m relay
sport
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
News
Chancellor George Osborne, along with the Prime Minister, have been 'complacently claiming the economy is now fixed', according to shadow Chancellor Ed Balls
i100... which is awkward, because he is their boss, after all
News
i100
Arts and Entertainment
Adèle Exarchopoulos and Léa Seydoux play teeneage lovers in the French erotic drama 'Blue Is The Warmest Colour' - The survey found four times as many women admitting to same-sex experiences than 20 years ago
filmBlue Is The Warmest Colour, Bojack Horseman and Hobbit on the way
News
Kenny Ireland, pictured in 2010.
peopleBenidorm actor was just 68
Arts and Entertainment
Preparations begin for Edinburgh Festival 2014
Edinburgh festivalAll the best shows to see at Edinburgh this year
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

(Senior) IT Support Engineer - 1st-3rd Line Support

£40000 per annum: Ashdown Group: A successful IT service provider that has bee...

Wind Farm Civil Design Engineer

£55000 - £65000 Per Annum: The Green Recruitment Company: The Green Recruitmen...

Principal Marine Mechanical Engineer

£60000 - £70000 Per Annum: The Green Recruitment Company: The Green Recruitmen...

Principle Geotechnical Engineer

£55000 - £65000 Per Annum: The Green Recruitment Company: The Green Recruitmen...

Day In a Page

Dress the Gaza situation up all you like, but the truth hurts

Robert Fisk on Gaza conflict

Dress the situation up all you like, but the truth hurts
Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

In grandfather's footsteps

5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

Martha Stewart has flying robot

The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

Do women cyclists need 'pootling lanes'?

Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

The dining car makes a comeback

Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

Gallery rage

How are institutions tackling the discomfort of overcrowding this summer?
Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

Eye on the prize

Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

Women's rugby

Tamara Taylor adds fuel to the ire in quest to land World Cup
Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices