The danger of payday loans

The danger of payday loans

Payday loans are getting a lot of attention at the moment. Following R3s recent survey, which revealed an estimated 8% of the adult population will be taking out payday loans to cover the cost of Christmas. The industry body expresses concern at the normalisation of debt and the proliferation of clever marketing strategies in the absence of sound professional advice.We spoke to Restructuring & Insolvencyexpert Frances Coulson, managing partner at Moon Beever and former R3 president about payday loans.

What are payday loans and how are they regulated?

Payday loans are pretty much what they say on the tin—they are aimed at people who run short before payday and get a loan until then. They are not heavily regulated and there has been much debate about regulation.

There is Office of Fair Trading guidance, including about how the subsequent debts are collected, and there are efforts to cap the rates of interest via amendments to the Financial Services Bill. Opponents of regulation say they are lending to m

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