Payday loan complaints soar by 94%
More than 20,000 calls for help with payday loans were taken by a debt charity in 2012, up 94% year-on-year.
Figures from the Money Advice Trust's National Debtline service also reveal it took a call for help about payday loans every seven minutes its phone lines were open in January alone.
Joanna Elson, chief executive of the Money Advice Trust, says: "National Debtline advisers help around 100 people every day to deal with payday loan debts, some callers have taken out as many as 80 such loans. Borrowing on this scale can have serious ramifications if not dealt with properly, and advice services like National Debtline risk becoming over burdened by the proliferation of payday loans."
The Money Advice Trust is putting pressure on the Office of Fair Trading (OFT) to take action.
Elson adds: "The rapid emergence of payday lending has caught regulators a little off guard. We have waited some time for real action to be taken to help prevent people falling into a serious debt spiral with these loans.
"We encourage the OFT to protect consumers by suspending the licences of those lenders shown to persistently break the OFT's own guidance on debt collection."
Short-term cash loans designed to be borrowed mid-way through the month to tide the borrower over until they next get paid, whereupon the loan is settled. Generally used by people with bad credit ratings and/or no access to short-term credit such as an overdraft or credit card. Like logbook loans, this type of borrowing is hugely expensive: the average APR on payday loans is well over 1,000% and in some instances can be considerably more.