http://www.yorkshirepost.co.uk/business ... -1-4329563 Plans for database to record all payday loans come under fire
Published on Saturday 10 March 2012 06:00
CALLS to ensure payday lenders record all transactions on a database to prevent consumers taking out multiple loans have been criticised by the Consumer Finance Association, which says it will be “expensive to deliver and maintain”.
The report from MPs called for tougher action to clamp down on “opaque and poorly regulated” commercial debt management companies and payday lenders.
John Lamidey, chief executive of the Consumer Finance Association, said: “The CFA welcomes any move which promotes best practice and responsible lending in the payday industry, so we fully support the recommendations in the report.”
Mr Laimdey said: “Implementing a database which requires payday providers to record all of their transactions in order to prevent consumers taking out multiple loans, will be expensive to deliver and maintain.
“This could push up the cost of loans and make loans unavailable to some consumers, yet there remains no data of academic quality proving the positive impact of databases. Simply removing access to payday loans does not remove a consumer’s need for credit.
“Indeed, evidence from the US shows that consumers in database states might borrow less, but they also suffer from expensive overdraft charges, unpaid bills or worse, use of illegal money lenders.”