Survey slams payday lenders

Payday lenders have been accused of “irresponsible behaviour” by trapping people with loans they cannot afford.

A study by Citizens Advice found that some companies were still failing to carry out basic checks tomake sure borrowers can afford to pay back loans.

A survey of over 400 people who had attempted to use payday loans revealed that one in four had not, or could not remember, being asked questions about their financial situation.

A separate study of Citizens Advice staff and volunteers showed that 27% said inadequate credit checks were the main cause of problems to the people they help.

The research found that fewer problems had been reported since a cap on payday loan interest rates was introduced in January 2015.

“Those surveyed said it was easy to get a loan”

C i t i z e n s Advice helped one 33-year-old man who was granted a payday loan following checks despite suffering from depression and alcoholism, havingnopermanent address, being previously declared bankrupt and having only benefit income.

The report finds that half of these borrowers are still getting into difficulty paying back their loans. Those surveyed said it was easy to get a payday loan, using online and phone applications, with fewrequiring credit checks.

The report also highlightednewmethodsbeing used to collect payments from people’s accounts. Citizens Advice found cases where a payday lender asked people to share their internet banking details including password so a lender could access their account and adjust funds without permission from the borrower.