MPs, debt charities and consumer groups have welcomed a new report published this week which provides insight into the way different UK households are approaching financial management in 2013.
The UK short-term loans trade body, the Consumer Finance Association, launched its inaugural “Credit Crunched” report at an event for MPs at the Houses of Parliament on Wednesday 15 May and presented findings to stakeholders at an lunch time event.
The report provides an in-depth look at customers, identifying the challenges and issues they face against a continued backdrop of economic uncertainty and lessons that everyone involved in the industry must learn.
Attendees at the launch events welcomed the report:
Justin Tomlinson MP, who hosted the parliamentary event, said: “The launch of this report is an opportunity for MPs from all sides of the political debate to look at ways the industry is seeking to pro-actively raise standards to protect consumers. In a complex financial world consumers are under an increasing number of pressures and demands. It is essential that MPs have access to the facts on the ground to make sure changes are relevant, appropriate and work in the interests of consumers. It is a credit to the CFA and its members that they are determined to raise standards.”
Chris Pond, Chairman of Credit Action, said: "Credit Action supports moves by the payday lending sector where they focus on improving standards across the industry, and clarity and fairness for customers. We'd hope that these would be the minimum outcomes of recent changes, including the CFA's independent monitoring of its Code of Practice. We look forward to seeing where this, and the transparency that the Credit Crunched report hints at, can develop."
Peter Tutton, Head of Policy at StepChange Debt Charity, said: "The CFA's recognition that there are problems within the payday lending sector is very welcome. What is needed now is positive action to ensure that lenders are conducting suitable affordability checks, identifying those in financial difficulty and protecting consumers from poor industry practice. StepChange Debt Charity wants to work with the sector to prevent payday loans becoming the borrowing of last resort for vulnerable consumers."
Which? also responded to the CFA’s report by reiterating its call for ‘tough action to crack down on irresponsible payday lenders who flout the rules’*.
The report entitled ‘Credit Crunched – A commentary on the UK’s changing attitudes towards borrowing and spending’ highlights:
- The diversity of people that are accessing short-term credit;
- Key areas for consideration by lenders and policymakers; and
- The pressures on different households’ finances and how short-term credit is being used as a money management tool.
Based on the largest study of UK payday customers that has ever been undertaken and a wide range of secondary research sources, the report has uncovered how three particular types of households have adapted the way they approach financial management post-2008. These are tech savvy twenty-somethings; parents with young children; and the burdened baby boomers who are dealing with both elderly parents and grown up children still calling upon the ‘bank of mum and dad’.
Russell Hamblin-Boone, the Chief Executive of the Consumer Finance Association, said:
“As the report shows consumers are being pushed by economic factors and pulled by cultural and technological changes leading people to approach their borrowing and spending differently. We are working to understand our customer base in order to ensure that we put in place the right protections for all customers.
“This report has lessons for lenders, but the government, regulators, consumer groups and debt charities all need to better understand the diversity of people accessing short-term credit to enable them to meet the needs of all consumers, including those that are financial hardship.
