17:15 27 February 2014
Based on a report released by StepChange Debt Charity, there were roughly 67,000 people who have sought their advice about loans in 2013, which represents an 82% increase compared to the figures gathered the year before.
Because of this, the charity has called on the Financial Conduct Authority to introduce more radical reform in order to protect financially vulnerable consumers across the UK.
Mike O’Connor, chief executive of StepChange, said: "The industry has failed to address the problems causing untold misery and damage to financially vulnerable consumers across the UK.”
"We hope the FCA's proposals will address some of the areas of consumer detriment, but on issues such as affordability checking, rollover and repeat borrowing, there is an urgent need for even more radical reform."
This April, the FCA is expected to regulate consumer credit organisations to cap the interest rates that lenders can charge. It also plans to prevent lenders from rolling over loans more than twice and will restrict the use of continuous payments authorities that are used to ensure repayment by borrowers.
Meanwhile, Russell Hamblin-Boone, chief executive of the Consumer Finance Association (CFA), a trade body for some payday lenders, doesn’t think that there is a real problem. He said: "Data from CFA members shows they receive less than five complaints, upheld or otherwise, for every 1,000 loans," he said.
"Independent research shows 94% of their customers pay back their loans on time, but we will continue to fund and work with debt advice agencies to help people who get into financial difficulty," he added.