The Citizens Advice Bureau is urging high-street banks to offer personal micro-loans to help cash-strapped consumers avoid taking out payday loans.
Chief executive Gillian Guy says banks should take some responsibility for the booming short-term loans industry and should consider introducing low-interest solutions as an alternative.
She says: “Banks can step up to the plate by offering responsible short-term loans that can be spread across a person’s bank account so they can pay an urgent bill and still feed their family without being sent into a spiral of debt.”
The Citizens Advice Bureau is encouraging local authorities to restrict access to payday loan websites on public computers.
Kingston CAB chief executive Pippa Mackie says: “CAB is asking all regional branches to contact their local authorities and see if they will restrict access on public access computers.
“Some families are going to find the transition onto universal credit, as part of the welfare reform, very difficult. Consequently, we are trying to raise awareness of our reservations about payday loans and loan sharks.”
John Charcol senior technical director Ray Boulger says: “Once you start down the route of forcing banks to do something they do not think is commercially viable, you enter into a vicious downward spiral.
“The Government could try incentives for banks to offer these facilities but the final decision has to be left to them unless the Government is willing to underwrite any losses.”