Stretched households need responsible short-term credit

Banks and other mainstream lenders are still leaving a huge gap in the market by not offering a responsible alternative to a short-term loan, says Citizens Advice as new research from Uswitch reveals half of payday loan customers believe they meet short-term borrowing needs in a way not offered by traditional lenders.

In April this year Citizens Advice called on banks to step into the breach by offering short-term loans after its failure to provide customers with what they need caused a boom in payday lending.

Citizens Advice Chief Executive Gillian Guy said:

“People are turning to payday loans because they don’t have enough money to get by. Unexpected expenses, like car repairs and big household bills, mean that many people are looking for short-term credit to fill financial gaps.

“I’ve been very clear that banks should shoulder some of the responsibility for the boom in payday lending and the dire debt levels that some people have found themselves in because of unfair treatment by their lender.  This could be avoided if there was a responsible alternative  on offer.

“This month Citizens Advice is running a campaign urging people to fight-back against payday lenders by making a complaint. All too often lenders are getting away with bad behaviour, like raiding people’s bank accounts without any warning or not checking if people can actually afford to repay the loan, but consumers can make a stand.”

This August Citizens Advice is running a campaign urging payday loan customers not to let predatory lenders get away with treating them unfairly after new evidence found three in four payday borrowers who got advice from the Citizens Advice consumer service could have grounds for an official complaint to the Financial Ombudsman Service.

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Notes to editors

1.Citizens Advice carried out an in depth analysis of 665 payday loan cases reported to its consumer service between 1 January and 30 June 2013 by consumers from England, Scotland and Wales.

2.The Citizens Advice service comprises a network of local bureaux, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more information in England and Wales see www.citizensadvice.org.uk

2.The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality. For online advice and information see www.adviceguide.org.uk  

3.You can get consumer advice from the Citizens Advice consumer service on 08454 04 05 06 or 08454 04 05 05 for Welsh language speaking, or online at www.adviceguide.org.uk.

4.Citizens Advice Bureaux in England and Wales advised 2.1 million clients on 6.9 million problems from April 2011 to March 2012. For full 2011/2012 service statistics see: http://www.citizensadvice.org.uk/index/pressoffice/press_statistics.htm

5.Out of 22 national charities, the Citizens Advice service is ranked by the general public as being the most helpful, approachable, professional, informative, effective / cost effective, reputable and accountable. (nfpSynergy’s Brand Attributes survey, May 2010).

6.Most Citizens Advice service staff are trained volunteers, working at around 3,500 service outlets across England and Wales.