More people are having problems with payday loan debts, according to a debt charity.
Between January and June StepChange Debt Charity helped 30,762 people with payday loan debts. This compares with helping 36,413 clients with payday loans in the whole of 2012.
It found that while the amounts owed have only risen fractionally, the number of people with five or more payday loans continues to “increase rapidly”.
Between January and June this year StepChange Debt Charity helped 6,663 people with five or more payday loans, for the whole of 2012 this figure stood at 7,221.
The average payday loan balance of StepChange Debt Charity clients for the first six months of 2013 was £1,665, up slightly from £1,657 in 2012.
The Leeds-based charity argues that the accelerating problems highlight the urgent need for reform of the payday loans industry and provide further weight to proposed changes to regulation set out in Paul Blomfield MP’s High Cost Credit Bill, which has its second reading in the House of Commons on July 12.
Peter Tutton, head of policy at StepChange Debt Charity, said: “The widespread failings of payday loan industry are well established and the case for urgent reform is overwhelming.
“The problem of payday loan debts continues to worsen despite the introduction of new codes of practice by the payday loan industry. The fact that we are still seeing increasing numbers of people with five or more loans and clients with loans in excess of their monthly income clearly shows that payday loan companies are still failing to lend responsibly.
“Financially vulnerable consumers have been inadequately protected for too long. What is needed now is a clear plan from politicians, regulators and the payday loan industry that will deliver demonstrable evidence of positive change in the market by the end of the year.”
StepChange Debt Charity believes that the High Cost Credit Bill represents an opportunity to address the worst excesses of the payday loan industry and establish a specific set of proposals for the Financial Conduct Authority when it assumes control of the market in April 2014.