Posted by: Tom Lloyd28/05/2012
When a government minister hails an agreement his department has thrashed out with trade bodies as a ‘step in the right direction’ it doesn’t fill you with confidence.
There are some clear benefits in the code of practice Norman Lamb and his colleagues at the Department for Business, Innovation and Skills have agreed with the four trade associations representing the bulk of payday lenders.
In particular moves to improve transparency and freeze charges and interest when customers get into problems are welcome. But is it really going to make a difference?
It is hard to see why we need payday lenders at all. If you haven’t been able to buy something you want from your salary one month, you are unlikely to be able to buy it the next month, so you should probably go without.
In situations where people are really in need of short-term financial help to meet genuine need there are alternative ways to get hold of cash, with credit unions being the most obvious example.
If the government really wants to protect people from short-term lenders it should be looking for much tougher regulation, or to abolish payday lending altogether.
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