Many in region worried by debt; Views of the North.
According to official figures, our region has the highest personal insolvency rate of anywhere in the country, at 35.2 per 10,000 adults.
Research carried out by R3 found almost three in five (59%) people in the North East are currently worried about their level of debt, and that over a quarter (26%) of them often struggle to make it to payday.
If used in the right way, to fill a genuine one-off gap in finances, a payday loan does have a place, but there is no doubt that they are increasingly being taken on as a debt solution, instead of a temporary financial solution, to cover the shortfall on household essentials such as food, heat and light.
When people on limited incomes getting into this sort of situation, it can be a very difficult task to escape it. Further R3 research found that one in three borrowers couldn't pay off the first payday loan, so have had to take out another one, which potentially causes individuals to spiral into serious debt problems.
The OFT report comes to some pretty damning conclusions about the payday loan industry, revealing that half of its revenue is earned from rollover loan, and there are also concerns over lenders failing to carry out proper affordability assessments.
The OFT's proposals for rapid action on compliance, and the threat of a referral of payday loan companies to the Competition Commission are welcome and necessary to improve the situation.
Finally, I would strongly urge those considering a payday loan to be sure they can pay it back on time and in full. We would recommend that people having difficulty with their personal finances seek advice from a regulated professional or a charity, and not to compound their problems by taking on more credit.
STEVE ROSS, North East chair of insolvency trade body R3, c/o 8th Floor, 120 Aldersgate Street, London EC1A 4JQ
|Printer friendly Cite/link Email Feedback|
|Publication:||The Journal (Newcastle, England)|
|Date:||Mar 13, 2013|
|Previous Article:||Centre had no part in festival; Views of the North.|
|Next Article:||Nuclear waste has killed no one; Views of the North.|