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Demands for payday lenders to clean up act; The big issue.

MINISTERS met with leaders of the payday loan industry earlier this week in a bid to thrash out the best way to deal with growing unrest with these short-term, high-interest loans.

Consumer groups are unhappy that the numbers of complaints are up since a voluntary charter was introduced recently, with many saying that it is now time for government action since the industry has clearly failed to get its own house in order.

Margaret Lynch, chief executive of Citizens Advice Scotland, believes it is time for something to be done.

"Many payday lenders operate in ways that ensure people will get into debt they can't handle.

"Lenders routinely target low-income groups, mislead about their charges, impose massive interest rates and then employ drastic efforts to recover the debt.

"The industry had promised to clean up its act but our evidence is that lenders are still operating in ways that are bound to hurt vulnerable people."

One of the big issues is the number of times that a loan is rolled over, or extended, if the borrower can't meet payments to clear the loan by the end of the initial term.

"This can lead to more interest charges and perhaps other fees.

"Part of the debate this week was about whether there should be a limit to the number of times that these loans can be rolled over, with the Office of Fair Trading suggesting that even one rollover was an indication that the borrower was in difficulty and needed help."

The advice from CAB is very clear: "If you have got into debt, avoid rollover loans. Come and see the CAB for free, confidential advice on how to cope.

"And to people who might be considering taking out a loan to pay for Christmas, we say, 'Be very careful about what you get into'.

"Payday loans might seem convenient today but they can lead to years of misery and debt that will destroy your life.

"Again, get advice before you borrow. There are other sources of credit that offer a better deal, are easier to repay and will save you from crisis."

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FRUSTRATION Payday loan interest can spiral out of control
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Title Annotation:Features
Publication:Daily Record (Glasgow, Scotland)
Date:Nov 8, 2013
Words:363
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