For immediate release Monday 26th November 2012 

In the wake of evidence of the widespread problems experienced by British families from payday lending and ahead of a key vote in the House of Lords, Mumsnet confirmed that it has banned these companies from their site. Responding to the campaign being run by Stella Creasy MP to introduce caps on the costs of credit, Justine Roberts, Mumsnet CEO and Co-Founder said,

“We haven’t taken advertising from legal loan sharks for some months now as it has become obvious from our forums that payday loans can cause misery for families. This has been further illustrated by Channel 4, the work of Sharkstoppers and by recent comments from the regulator, the office of fair trading, which on Tuesday wrote to payday lenders and expressed concern about aggressive practices. There are clear problems with this industry, and until it is cleaned up, we don’t want anything to do with it.

Of course people do sometimes need access to emergency funds but that doesn’t mean they should be exploited. It would help if banks could do more to help avoid the descent into a cycle of debt but the overwhelming feeling on our forums is that payday loans should be better regulated and that there should be a cap on the interest rates that they can charge. Lots of people feel that advertising from payday loan companies is inherently dishonest because it normalises astronomical interest rates. There is also lots of support on Mumsnet for improving financial education in schools, so people can be less easily exploited.”

Speaking about this development Stella Creasy MP said:

‘Every week now we see evidence that legal loan sharks are out of control and causing problems for millions of families in Britain who are now getting into debt by using this toxic type of credit. There is no excuse for the Government not to act to protect British consumers, but despite evidence from other countries of what works they still refuse to do anything to help. Yet just because they won’t do anything to help hard pressed families, doesn’t mean that we can’t - Mumsnet’s stance will be very welcome to many of those struggling with payday loan debts this christmas and I hope they are not the last organisation to take a stand on the need to sort out this industry.”

Ends.

Notes for editors:

1. Mumsnet is the UK’s biggest network for parents, with nearly 45 million page views and 6.5 million visits per month. It has 200 local sites, as well as a network of around 2,000 bloggers. It regularly campaigns on issues such as support for families of children with SEN, improvements in miscarriage care and freedom of speech on the internet.”

2. A survey by Which? in November 2012 shows;

  • Half (48%) of payday loan users have taken out credit that it turned out they couldn’t afford to repay.
  • A third (29%) of payday loan users have taken out credit that they knew they couldn’t repay.
  • In the last 12 months, more than half (57%) of people with payday loans have missed a payment and have incurred charges because of missed or bounced repayments (56%).
  • 43% of payday loan users say it’s too easy to get credit.
  • Almost a third (31%) were hassled by debt collection agencies in the past 12 months.
  • One in ten UK payday customers have incomes of less than £11,100 per year and 46% have incomes of less than £15,500 a year.
  • Research by WHICH? Showed that over 60% of people who took out payday loans were using the money to pay for household bills or buying other essentials like food, nappies and petrol.
  • Payplan, a debt charity company, says that 47% of its clients had six or more payday loans in the last year alone. Most crucially, 86% of its clients were using the loans for basics—food, transport and the basic costs of everyday living, not luxuries.

3. R3, the insolvency practioner, commissioned research from ComRes published today showing more than 5 million adults are considering taking out a payday loan in the next six months.

  • More than 5 million (5,205,237) GB adults say they are considering taking a payday loan in the next six months. This equates to approximately a 50% increase since this time last year, when it was around 3.5 million individuals.
  • These loans are most likely to appeal to the younger demographic, with more than one in four (26%) of 18-24 year olds likely to seek a payday loan in the next six months. This is well above the national average across all ages of 11%, and 4% of those aged 45 and over.
  • London is the UK region most likely to seek a payday loan in the next months, with 23% of Londoners saying they are likely to take one.
  • In the past six months, 13% of the GB population have prioritised paying back these loans over traditional ‘essentials’, such as buying food, clothes or paying for gas and electricity. Specifically 7% have prioritised paying back these loans over buying food in the past six months.
  • This figure is higher amongst younger ages groups, 12% of 18-24 year olds or 15% of 25-34 year olds have prioritised paying back a payday loan over buying food in the past six months.

4. Stella Creasy MP has been campaigning for caps on the cost of credit since 2010. You can findmore details on her campaign here.

For more details on the campaign to tackle legal loan sharking in the UK visit Stella Creasy MP’s website www.workingforwalthamstow.org.uk ; or call 020 8521 1223. For press enquiries regarding Mumsnet please contact Jane Gentle on jane@mumsnet.com



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