Cap on Payday loans costs is a step in the right direction, but how many more people will be fleeced while we wait for the ruling to be implemented?

LONDON, November 25th, 2013.
In response to today’s announcement from the Government to introduce a new law to cap the cost of payday loans, Will Becker, CEO and co-founder of TotallyMoney.com comments: “At last, the Government is taking action against the damage payday lenders continue to inflict on large segments of the UK population. However, after waiting far too long to take action, the speed at which these new regulations will be implemented is a great concern – why do we need to wait until 2015 for caps? The more time that elapses, the more vulnerable victims will be sucked into what I can only describe as the Venus fly trap of consumer lending.
“Chancellor Osborne cited evidence from Australia that caps on rates can be effective as a pre-cursor for acting. But such evidence has been available for years. Most US States have successfully imposed caps on interest rates for many years so the question is, why did it take our Government so long to act in the face of so much evidence that rolled-over payday loans are damaging our economy?
“However, this is also an industry issue. Consumers are only opting for payday loans because there have been few alternative solutions. Better value alternative solutions, such as the UK’s first nationwide credit union from My Community Bank which was launched today, could prevent short term cash-flow problems turning into debt spirals. In particular, the mainstream lending industry needs to match payday’s convenience and immediacy. Lenders such as Wonga have made it much easier and speedier to borrow – and consumers have shown they will pay a premium for such convenience. The Government can only go so far to protect the consumer from expensive lending, financial providers really need to step up to the plate and provide affordable alternatives that offer competitive speed and access.”

ENDS

About TotallyMoney.com:

TotallyMoney.com, launched in 2007, is the UK’s leading credit-focussed comparison website which sets out to make it simpler for consumers to compare credit cards, loans and mortgages. With a revolutionary approach to credit comparison, TotallyMoney.com uses exceptional comparison tools to empower people to make better financial choices.
As part of the Media Ingenuity Group, TotallyMoney.com sits alongside affinity credit card brands. Fluid is a portfolio of market leading ‘prime’ products issued in partnership with MBNA, Luma a ‘sub-prime’ credit card partnership with Capital One and Granite card with Vanquis Bank. Being both a credit comparison service and a marketer of credit card brands gives the business a unique and in-depth perspective of the industry.

 

For more information, please contact James McCaffrey

About TotallyMoney

TotallyMoney has been championing fairer and better consumer credit since 2007 by helping customers make smart borrowing decisions. We won Best Free Credit Report Provider in the 2018 Moneynet Personal Finance Awards and, in under 12 months, our Free Credit Report has already put more than 500,000 customers in control of their credit data.

Plus, we pioneered soft searching and eligibility scoring to reduce customers’ risk of being rejected for credit. Our services are designed to simplify personal finance, helping customers improve their credit rating and find the best products to meet their needs. To date, our platform powers the likes of Confused.com, Noddle, and ClearScore to name but a few.