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Citizens Advice urges banks to offer payday loan alternatives

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.”

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Comments

There are 18 comments at the moment, we would love to hear your opinion too.

  1. Dominic Thomas 1st May 2013 at 4:13 pm

    This is precisely the sort of role high street banks should be playing… not attempting to do financial planning. Banks are meant to be solid lenders, ideally where a local branch manager knows the local client and can assess suitable borrowing facilities. Provided that this is done sensibly, this ought to be perfect business for high street banks and ought to be a far better solution than the 1000%+ APR payday fleecers.

  2. dAphne,jenkinssmythe 1st May 2013 at 4:13 pm

    I always found it crazy that a regulator that is supposed to look out for vulnerable customers would allow payday lenders to charge 4589% apr loans, so if someone borrowed £100 they would have to pay back £382 on now its now £392……..sorry been another hour so £402. now this is an exaggeration but its not that far from the truth. I believe this to be a form of extortion!

  3. What a silly idea. The banks are ‘bankrolling’ the payday companies why kill goose etc

  4. How much did Ray Boulger get paid to say that. Stop sitting on the fence mate, you should be ashamed of yourself. These loan shark companies are charging thousands of per cent in interest. People are commiting suicide because of these parasites, and the banks just sit by getting money at zero per cent interest oblivious to the carnage their actions have visited on our people. Sooner the banksters are put behind bars for dodgy dealings, market rigging , drug money laundering and just about every financial crime known to man the better. As for Pay day loans. simple answer, ban any interest over 10%, enforce anyone charging more than 10% with fines and prison for repeat offenders. Sorted. Better still bring back the Bradbury pound, no need for interest at all then. Oh but wait who would pay Ray for his worthless opinion….

  5. Agree with Ray B. Will civil servanmts please stop showing their ignorance of commerce with such silly proposals.

  6. Can you really believe these clowns! in an era of affordability and after telling banks they charge too much interest, they want quote “Banks to lend to cash strapped customers!”.Once they have we’ll arrange for CLC’s to sue you on behalf of said clients quoting “affordability and accountability”.

  7. Daniel Barton 1st May 2013 at 4:49 pm

    Is this really a good idea? Research has already shown that a high proportion of people that take these loans do so to pay everyday bills and not for emergencies. Therefore it wouldn’t matter if the interest rate was 1% or 1 million% they would still not be able to repay this debt in any reasonable time frame.

    However as more money is the only answer can there ever be a solution that won’t put them in debt?

  8. Simon Kershaw 1st May 2013 at 6:39 pm

    An overdraft perhaps?

    Muppets.

  9. I agree with Daniel Barton and Ray Boulger. Payday loans are legalised robbery however. What is the solution? Once far in debt I don’t know, but it isn’t payday loans which should only MBE a short term solution. Credit unions serve a useful social function and all my firms capital adequacy is now being placed with a local credit union as I,d rather earn low interest there than at a bank as at least it can help fund loans via the credit union. Check without at as somewhere to hold your cap ad if you are directly regulated.

  10. I’m loving Paul Griffin’s “Daily Mail” response to the whole thing, clearly has no understanding of the issues.

    If you set a limit of 10% on all interest rates then payday lenders (or banks, or anyone else for that matter) would make a loss on loans to these people, since they are made at such high risk. So then nobody would offer any loans at all to those who need them, which is far worse.

    I don’t mean to be harsh, but people are not committing suicide because of payday lenders, they’re committing suicide because they don’t know how to budget. Payday lenders only exist because so many people choose to spend more than they can afford. We are a nation of “wants”, with people racking up huge debt on nice houses, cars, holidays, mobile phones, big TVs, etc, etc, without planning how they expect to fund any of this if they lose their job.

    I have little sympathy for someone who has been working for years and now suddenly can’t afford their heating bills. What happened to all your savings? Oh that’s right, you didn’t save anything.

  11. Simple, an overdraft with a limit reducing at a set rate per month. was possible to do that 22 years ago when i worked in a bank.

  12. NATION WIDE LOAN FIRM 3rd June 2013 at 8:52 pm

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  13. ST GEORGE CATHEDRAL FINANCE
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    **********************************************************************************
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    3)YOUR OCCUPATION………….
    4)YOUR MARITAL STATUS………
    5)PHONE NUMBER…………….
    6)MONTHLY INCOME…………..
    7)ADDRESS…………………
    8)PURPOSE OF LOAN………….
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    LINK FINANCE LIMITED
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  16. REV HARRY OSCAR 22nd June 2013 at 12:40 pm

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    ===============================
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  18. LINK FINANCE LIMITED 25th June 2013 at 9:12 pm

    LINK FINANCE LIMITED
    Tooke House
    20 Bull Plain
    Hertford
    Herts
    SG14 1DT
    london
    United Kingdom
    Registration Number:07547926
    Email:linkfinance@consultant.com

    **********************************************************************************
    Gets good money lending service today that is generally
    reliable,safe ,filtered
    by International Loan Agency and also Tested and Trusted. We give out loan for
    Any purposes, if you are really in need of a loan,, just let us know
    the amount you need as a loan,and your
    problems will be over.We issue loans to individuals despite their
    financial conditions.,and low credit score.

    Are you in need of a loan?
    Do you want to pay off your bills?
    Do you want to be financially stable?
    All you have to do is to contact us for more information on how to get
    started and get the loan you desire.
    This offer is open to all that will be able to repay back in due time.
    Note-that repayment time frame is negotiable and at interest rate of
    2%.

    You are expected to inform us of the exact loan amount requested so as to
    enable us provide you with the Loan Terms and Conditions. if you are
    interested in obtaining loan from our firm.
    Please, do complete the short application form given below and we
    promised to help you out in any financial needs you are in
    LOAN APPLICATION FORM { ONLINE FORM }

    1)YOUR NAME……………….
    2)YOUR COUNTRY…………….
    3)YOUR OCCUPATION………….
    4)YOUR MARITAL STATUS………
    5)PHONE NUMBER…………….
    6)MONTHLY INCOME…………..
    7)ADDRESS…………………
    8)PURPOSE OF LOAN………….
    9)LOAN REQUEST…………….
    10)LOAN DURATION………………

    LINK FINANCE LIMITED
    THANKS,
    Mr Thomas Williams

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