Borrowers suffering from rampant payday loan related debt are absolutely losing their minds out of desperation, though credit unions are trying to help.

You know that things are getting bad with those suffering from payday advance lending debt when people begin to turn to crime in a misguided effort to clear their debts. This is exactly what happened recently, as one 20 year old carer felt he was so badly off that he actually stole a ring worth nearly £500 from an 85 year old man he was providing care for because he thought he could sell it and pay back some of his £2,500 payday loan debt.

The man was caught, of course – it’s not like he was thinking very clearly at the time – but this indicates better than anything how terrible the debt problem is growing in the UK if people are resorting to theft in an effort to get out from under crushing payday lending debt. In this instance the young man’s initial loan was for £500, but his debt rocketed upward after he missed his repayment deadline – and that’s when the punitive late fees and massive interest rates charged by your average payday lender kick in!

Luckily there are alternatives beginning to emerge when it comes to finding emergency credit – and the best place to find these alternative loans is at your local credit union. More and more credit unions are advertising their services as a low-cost alternative to a payday lender, and the newest one to do so is Somerset Savings & Loans, based in Portishead. The payday lender’s new Freedom Loans programme offers 26.8 per cent interest rate loans to its members for any amount ranging between £500 to as high as £1,500, offering an entire year to repay the balance instead of just a few short weeks like lenders such as Wonga and QuickQuid offer.

While you need to be a member in order to access credit union-sourced lending, membership in your typical credit union is often quite easy. As these member-run not-for-profit lenders are interested in growing a savings culture in the UK, you may be asked to open up a savings account with your credit union of choice before being allowed to access credit, but the deposit requirements on these savings accounts are very manageable – most credit unions won’t ask for more than £10 or so, while I’ve seen some that will only need a single pound of your money before giving you the financial help you’re looking for at a fraction of the price a payday lender would charge you.

Good and bad news both for lenders and borrowers this week: the CFA refuses to cap interest rates even as the government gives £38m in funding to credit unions.

Bad news for lenders is that there’ll be facing some stiff competition from local credit unions, thanks to the government’s new £38 million funding pledge designed to go directly towards low-cost lending for those in need. The government would like to see at least one million low-cost loans given out by credit unions in order to cut down the number of Brits having to rely upon payday loan providers for their emergency cash needs in the hopes that this will cut back on the amount of payday loan related debt encountered by people having to repay 4,000 per cent APR payday loans.

This could make a serious difference in consumer debt for low income earners, especially in an economy with rampant increases in the cost of living and massive unemployment or underemployment even years after the credit crisis and resultant economic downturn. The effects of the recession are long-reaching, and many people just don’t have the financial wherewithal to pay their bills and deal with a financial emergency; this has led to the increase in popularity for payday advance lenders but has also brought with it a serious debt problem that can hopefully be rectified by low-cost credit union lending!

Unfortunately this may be the only true help the nation’s low income earners are going to be getting from the government when it comes to finding lower cost lending; the soon-to-be-launched Financial Conduct Authority, the government watchdog that will be keeping watch over the payday lending industry from 2014, has declared that it will not be calling for a cap on payday loan interest rates. This is bad news for anyone who was hoping for some relief from high interest rate short term loans, but obviously good news for the payday lending industry itself.

The FCA says it has fears that instituting interest rate caps will cause lenders to scale back availability to lower income earners or those with spotty credit records, as a lender’s potential for profit will be diminished if their interest rates are regulated. Payday loan providers may begin to only offer their services to those they feel are good credit risks, which would eliminate emergency access to consumer credit for too many Brits, says the regulator, and could do more harm than good.

It’s a valid point, but can’t you already make the argument that the payday lending industry as it is now is already doing more harm than good? Yes, you can easily get a few extra quid in a hurry in order to help bridge the gap one month, but the next month you’re in even hotter water when you’ve got to pay your regular bills in addition to the payday loan repayment – and if you don’t have enough money now, you’re not going to have enough the next month either!

Last week, internet search giant Google put the screws to one online comparison site because the pay-per-click payday advance lending adverts the site was running violated the search engine’s policies. Google turned the adverts off until having a nice, long talk with the comparison site, resulting in the adverts going back up after a relatively short 24 hours, but now comparison site representatives have been wailing about how they weren’t given any advance warning by Google before getting their slap on the wrist.

Comparison site reps even went so far as to imply that Google’s advert practices were draconian, considering how they’re in compliance with the Office of Fair Trading’s advert guidelines. For what it’s worth this is just unbelievable: it’s not as if Google is ruining people’s lives with their high interest rate short term loans featuring misleading adverts, now is it?

On top of that, Google actually did issue warnings this past January to any firm using its pay-per-click advert service, so it seems like to me that this comparison site is all bent out of shape because it didn’t get special treatment. Sounds like they were a bit too big for their britches; I hope Google took them down a peg or two!

While it’s good to see a comparison site put in its place, more news emerging this week is sure to leave anyone with the hopes that the new Financial Conduct Authority would bring some much-needed regulation to the payday loans industry with a bitter taste in their mouths. The FCA just announced that it has made the decision to not institute interest rate caps on payday lenders, despite the fact that it will have the authority to do so once it launches in 2014, effectively allowing these legalised loan sharks free rein to continue their rampage across the UK.

The FCA made their case by saying that capping interest rates would force payday lenders to become much more selective about who they offer funds to, which would reduce overall access to credit for those consumers who have exhausted traditional options such as banks and credit cards. Now, this may be true to some degree, but the damage done to those not being able to seek out a payday lender is nothing compared to the damage the short term lending industry is doing right this very minute, with their exorbitant interest rates and late fees that can leave people paying massive amounts of cash on a relatively small initial loan – the FCA is mad if it thinks letting lenders continue to act unfettered is going to make things better for anyone besides payday lenders themselves!

Purveyors of payday loans online are so fearless that threats from the world’s most popular search engine provider don’t even register on their radar!

There are several payday loan providers operating in the UK that have out-and-out flouted advertising rules put in place by Google in an effort to increase transparency when it comes to the terms and conditions of payday advance lending agreements. Back in January, Google released new guidelines requiring any payday lender using its Google Adwords advert service to provide easily readable information about interest rates, repayment terms, and other relevant items on the same page that an Adwords advert leads a potential borrower to when clicked, but quite a few lenders have not bothered to comply with the guidelines properly, or even at all!

Google says that any of these firms neglecting to meet its advertising standards would have their Adwords accounts suspended, though when the search giant was approached there was no comment made to the press as to when and if these suspensions will be taking place.

However – and for what it’s worth this next story is an absolute favourite of mine as I think it’s positively brilliant – there are other ways to prevent payday lenders from getting their poison message out over the internet. In fact, East Renfrewshire Council has moved to block access to any lending sites from every council-owned computer in order to cut off at least one small avenue of attack for payday lenders.

It’s not perfect, but it’s a  good start, as now no computers available to the public such as in libraries will permit anyone to access these legalised loan sharks. With many payday lenders seeming to target low income earners – exactly those types who might not necessarily have access to a computer at home and instead rely upon public access computers – this could indeed bring about a lower number of low income Brits following through on plans to apply for payday lending in the first place, though I suppose there’s nothing to be done about anyone going down to the high street and finding their local cash shop, is there?

Let’s face it: nobody likes payday advance lenders unless they’re being paid to, but these payday loan providers have some very deep pockets!

Almost every day you hear more news about how providers of high interest rate short term loans are responsible for growing debt and that complaints about payday lenders and their behaviour towards their borrowers are reaching record highs. In fact, debt charity Money Advice Trust, the organsiation behind the operation of National Debtline, says that last year their debt hotline fielded in excess of 20,000 payday loan related debt calls last year alone – the highest figure on record for the charity.

Yet even in the face of this seriously widespread negative press that payday lenders such as Wonga and QuckQuid gather about themselves like a tattered, moth-eaten blanket, it’s still business as usual to make payday loans as enticing as possible to savers with no where else to turn. In fact, research conducted by consumer campaigner Which? recently discovered that payday loans are incentivised by cashback sites, websites that do more or less what it says on the tin: provided cashback bonuses to consumers for using the goods and services of companies promoted by the site.

The Which? survey took a look at 10 leading cashback sites, discovering that there were a total of 27 payday loan companies running more than 70 adverts on these sites. Bonuses dangled in front of consumers for taking out a payday advance were as small as less than £5 to over £50, and Which? says offering cashback incentives to consumers considering a payday loan could act as an encouragement to people to enter into the kind of debt that is nearly impossible to crawl out from under.

I have to agree with Which? wholeheartedly. Offering a few quid as an incentive to end up in crippling debt is absolutely terrible, considering that Brits in need of emergency cash are often so blinded by their dire need for financial help that they aren’t thinking as clearly as they need to be when it comes down to making a decision concerning lending; entering into a loan agreement is always a deadly-serious matter that needs to be given careful consideration, especially when we’re talking about a payday loan that’s going to come back to haunt you with its ridiculously high interest rates after just a few short weeks!

There’s just no pleasing some people: even as the Office of Fair Trading strips the consumer credit licence from one firm, it’s criticised for not doing enough.

It was ‘score one for the good guys’ recently when the OFT put one provider of high interest rate short term loans soundly out of business recently after the watchdog decided that the firm didn’t do enough to prevent identity thieves walking off with millions of pounds worth of payday lending. The lender, MCO Capital Limited, was defrauded by scammers using the identities of 7,000 people without their knowledge or permission, and it was just too much incompetence for the OFT to bear, and while the firm was able to continue trading while it appealed the OFT’s decision, the time has come to pack it in – and pay the more than £500,000 penalty imposed by the watchdog; I for one am absolutely thrilled to see that not only did the OFT act to put this payday lender out of business but that MCO Capital now has to pay a fine as well!

Meanwhile, this wasn’t enough for the Centre for Responsible Credit to not give the watchdog a piece of its mind. The debt campaigner said that the OFT is taking too long in issuing warnings to massive payday lenders such as QuickQuid and Wonga, who were named in he 50 firms that were found to have been breaking lending rules by an OFT investigation.

The watchdog found that there ‘irresponsible lending’ practices were widespread within the industry as a result of its probe, and that it’s giving these firms just 12 scant weeks to clean up their acts or join MCO Capital in being shuttered.  Still, this wasn’t enough for Damon Gibbons, director of the CRC, as he would rather see the new watchdog scheduled to take over in April of 2014, the Financial Conduct Authority, be launched ahead of schedule in October of 2013.

Mr Gibbons said that the CRC is simply losing patience with the Government and the OFT, and I suppose he may have a bit of a point considering that the investigation the current watchdog ran took months and months, yet payday lenders have been raining down destruction on the UK’s lower income earners for years now. Anyone with half a brain could have just strolled down the high street and ducked into the local cash shop to interview people queued up for a payday loan to learn how these high interest rate lenders ruin borrowers’ lives, after all.

Pessimists will say that every silver lining has its cloud, and when it comes to the payday lending industry I can’t help but to agree with them on this one.

It’s no secret that the Office  of Fair Trading handed down a serious ultimatum to the nation’s payday advance lending institutions recently, as the industry has about 12 weeks from the OFT’s decision to shape up or be shipped out, as it were. Well, in response to the rap on the wrist, the largest trade industry body that represents around 70 per cent of the nation’s payday loan providers has said that it will be creating a so-callled ‘independent regulator’ to keep members in line.

Payday industry body the Consumer Finance Association announced that it has plans to set up a panel with the authority to regulate any member of the CFA that deviates from its voluntary ode of practice. Big flipping deal, I say, considering how the CFA doesn’t govern some of the largest payday lenders in the UK such as Wonga, whose 4,214 per cent annualised interest rate loans have become synonymous with the kind of usury you find associated with short term loans from payday lenders.

So that was the so-called ‘silver lining,’ but what about the dark cloud that accompanies it? Well, new reports have been revealed lately that detail how tenants are so hard up for cash that many have begun to resort to serious measures in order to keep making their rent payments – including relying upon payday loan companies.

The new data – which comes from respected housing charity Shelter – is frightening, and Shelter has said that tenancy agreements need to be more stable to prevent families from ending up between a rock and a hard place when it comes to making rent payments, especially when there’s a sudden increase in rent prices that comes without warning. The housing charity says that there were nearly one third more calls coming in to their helpline .dealing with arrears or rent increases than there was over the past 12 months, so things are definitely getting quite a bit worse!

It’s a case of ‘better late than never’ this week, what with the Government finally beginning to crack down on those legal loan sharks known as payday lenders.

In fact, the Office of Fair Trading has given the payday advance lending industry just 12 short weeks to clean up their act following an exhaustive investigation into the payday loan market, uncovering untold examples of sharp practices that weren’t just morally wrong but actually broke the law in several places! Now I’m not one to find glee in the misfortune of others, but I have to admit that the schadenfreude of finding out payday lenders are finally reaping what they’ve sown fills me with some very righteous joy, especially since their high interest rate short term loans have taken such a serious toll on the finances of all too many Brits over the past few years following the economic downturn.

But now, borrowers have the fine folks of the OFT on their side, as the regulator has ordered a full 50 firms – around 90 per cent of the entire payday lending market – and found every single one of them wanting. These lenders now have just shy of three months to get their affairs in order if they want to hold on to their consumer credit licence; is it too much to hope for some of them to not make the deadline?

The report and subsequent ruling has set off an absolute firestorm of ‘I told you so’ from the debt reform crowd.  The biggest and most tenacious debt campaigner of them all, Stella Creasy MP, made waves of her own this week when the commented on the developments. While Dr Creasy was vindicated to see the OFT had arrived at the same conclusion she has been pointing to for months and years – that payday lenders are almost all universally bad – it’s a long way in the Labour MP’s opinion before low income earning Brits can free themselves from the grasp of these pernicious loan providers.

Dr Creasy took the opportunity to call upon the Government to take it one step further in order to rein in these payday lenders by instituting an interest rate cap on these lenders. This is something that we sorely need here in the UK if you ask me, considering how it’s routine for a big bad firm like Wonga to charge anywhere upwards of 4,000 per cent in annualised interest on their lending products – an absolutely criminal amount by any standards, not just mine!

Let’s hope that, between the OFT and Dr Creasy, the Government has finally found the guts to regulate payday lenders within an inch of their lives. I know I’d sleep better in such a situation for sure.

Everyone I talk to or read about is incredibly worried about debt from payday advance lenders and their short term loans. In fact, the Hemel Hempstead debt centre manager for Christians Against Poverty, Owen Cooper, is absolutely convinced that it won’t be long until payday loan related debt becomes a serious problem for those coming to CAP with debt problems.

It’s an absolute struggle for all too many households to deal with the marked increase to council tax and utility bills, and that has led to many considering tasking a payday lender up on their offer of instant cash loans up front without having to go through the vagaries of a credit check. However, interest rates and late fees are so high on these payday loans that Mr Cooper had to speak out against them, remarking that really any loan is a bad idea when you’re running into problems as it is making ends meet with the cash you have.

Meanwhile, National Debtline has said that there is absolutely a massive increase in the number of people going to it for help with payday loan related debt. In fact, there were more than 20,000 calls placed to the debt advice charity over the course of 2012 that were exclusively about payday lending debts – and that was almost twice as many as National Debtline received in 2011.

These figures are absolutely terrifying, if you ask me. The idea that some 20,000 Brits are getting themselves into trouble with these lenders makes me hope and pray that the Government will get its act together and start to regulate this sector of the lending industry.

Sure, payday lenders claim that they provide ‘a valuable service’ to anyone who can’t qualify for a standard loan from a bank or a building society, but why then to they charge so much blasted interest and wring people out when it comes to late fees? Bunch of right bastards if you ask me, and I’d like to see them put in their place finally before they do even more damage to our already fragile economy – you can’t tell me that there’s a reason for a lender such as Wonga to charge more than 4,000 per cent in annualised interest and then slam a borrower with insanely high late fees if they miss their repayment deadline.

Payday advance companies certainly run roughshod over Brits on a regular basis, but it’s no picnic for our cousins form across the pond, either!

In fact, not one but two news stories from the US indicate that they’re up to their eyeballs in the tender ministrations of payday loan providers. Considering that payday lenders are much more tightly regulated over in the colonies than they are here, it seems that Americans shouldn’t have much to complain about, but apparently payday loan companies are poor sports regardless of what port they operate from.

The great state of New York in particular has had enough of payday lending debt collectors, with Governor Andrew Cuomo remarking that it’s time to send these collectors packing. Governor Cuomo remarked recently that the state’s Department of Financial Services has alerted via post debt collectors operating within New York that they have no legal right to collect on the loans and are in fact breaking state law by doing so, especially since the criminal usury laws of the state prohibit any lending rates over 25 per cent.

Annualised rates for payday loans in the US can run as high as 400 per cent, which is indeed chump change for someone here in the UK suffering from a 4,214 per cent APR loan from someone like Wonga. I’ll wager that if someone tipped off the good Governor concerning the disparity between UK and US payday lenders and the rates they charge, his head would positively spin!

Meanwhile, the state of North Carolina – an early pioneer in stamping out payday lending by outlawing the practice within its borders 12 years ago – is coming under fire from renewed pressure to allow short term lending once more. Special interest groups in the Tar Heel State are pushing hard for the return of these legalised loan sharks, and lobbyists have several state legislators in their deep, well-lined pockets, I’m disappointed to report.

Pat McCrory, the governor of North Carolina, has yet to say whether he’ll support or oppose the plan, though he has campaigned on a promise to treat businesses wishing to operate within he state with sympathy and support. The North Carolina General Assembly has many state representatives that support such a plan in the hopes that it will encourage economic recovery by turning the state into a place where businesses of all types are welcome, but for what it’s worth this truly sounds like an absolutely terrible plan to me, considering the havoc payday lenders regularly wreak on household finances – especially low income earners.

Still, it may not be a terrible idea at least in North Carolina, as proposed legislation would cap interest rates at 15 per cent for loans $500 or less (about £325). Again, this is far and above better than the kind of rates you can end up paying in the UK, so as long as these types of loans stay well-regulated perhaps it won’t lead to nearly as much financial ruin across the pond.

Supporters also say payday loans offer a reasonable, government-regulated option for people desperately in need of cash with nowhere else to turn. Consumer advocates say the loans and fees can trap consumers in debt as new loans are borrowed to replace old ones.

The average customer of leading payday lender Advance America takes eight such loans in a year, according to the Spartanburg, S.C., company’s annual report.