Research from the StepChange Debt Charity shows that half of adults in the UK are receiving phone calls from companies offering payday loans and other high-risk financial products, and have called on the Treasury and Financial Conduct Authority (FCA) to ban such calls.
Research has shown that one in eight people receive a call on a daily basis, hearing about financial products, such as payday loans and fee-charging debt management services, which carry a high risk of leaving the person in spiralling debt. Purchasing these services could see people
extend their debt by a further £1,052 on average, a survey found.
“When someone is already in financial difficulty, they may be at their lowest ebb and feel they have no option but to make quick decisions through desperation, which can bring devastating consequences,” said Mike O’Connor, chief executive of StepChange.
“A full and complete ban would not only protect those already in financial difficulty, it would also prevent further damage to the millions of people whose phones keep ringing and ringing.”
Payday loans can actually be cheaper than if you borrowed money on an unarranged overdraft from the bank, according to Which?. The consumer group said that you face a maximum charge of £22.40 when borrowing £100 for 28 days, significantly less money than you would be charged for taking out an overdraft, which will see you charged £90.
However, banks have said there are cheaper alternatives to unarranged overdrafts, and that they should only be taken out as a last resort.