After a report from the OFT (Office of Fair Trading) earlier this year, the companies that offer payday loans, have been subjected to a variety of investigations to ensure that they abide by regulations. A payday loan encourages people who are having financial difficulties to get themselves further into debt instead of finding long term solutions to their financial problems.
The article on The Telegraph explains where the problems with payday lenders are and why they have been given a year in which to either comply or have their lending license removed.
Although a payday lender does seem like a great solution to the family that needs to put food on the table and be able to pay for traveling costs till the next payday, it creates a vicious circle of re-lending which is not solving the core problem. Being able to solve the core problem is a novel thought though, with everything becoming more expensive on a weekly basis, how is one expected to make their salary stretch, even if they do not have additional debts to cover on a monthly basis?
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