Over the past few years, as the banks restrict personal credit, we have seen the massive expansion of payday loans. I noticed in a recent planning submission that the Money Shop (representative APR - 219.1%) is planning to open more than 200 stores over and above its existing 407 stores. As budgets get tighter and the banks more uncaring, the poverty market is increasingly been met by expensive providers. Many of our town centres are being filled up with pay day loan shops, cash for gold outlets, pawn shops and expensive monthly payment stores. They all aggressively market themselves on TV and through sports like Football (middlesborough and Blackpool FC are sponsored by Ramsdens for Cash and Wonga.com respectively). Personally, I think the very easy availability of these shops is dragging our high street down as well as putting temptation in the way of the most vulnerable in society.
I would consider making expensive credit shops a separate planning category aside from the A2 category so we could set limits for the number of these establishments in our town centres. At the moment they are categorised like a bank in planning terms, which makes them hard to restrict. I would also ban advertising for such products. The current industry seems very lightly regulated and many adverts running seem to encourage payday loans as a no bother pain free experience. Many people I see at the CAB have been given unsuitable and unaffordable loans and are then allowed multiple rollovers. Many are then aggressively pursued by debt collectors.
I accept that from time to time people might need emergency cash and that,, in those circumstances, a payday loan may be not so bad. I would suggest that we restrict the number of times people can get emergency cash in this way to 5 times a year. After that they would need to seek independent debt advice and counselling before they can take more out.