Member Article

UK Financial Study Claims London is The Most Vulnerable Payday loan lending city

Research published by UK credit broker CashLady and financial wellbeing platform FairQuid has revealed that Londoners are the most susceptible to payday loan applications, according to data acquired over the last 12 months.

The data, which reportedly took into account 376,518 applications throughout the United Kingdom between September 2017 and September 2018 revealed that 58,279 (15%) came from the capital.

The study also showed that North Yorkshire, the North West, the Midlands followed by Scotland made up the top five regions and the highest portion of employees looking for a quick fix to help them overcome short-term financial strife.

Meanwhile, the data highlighted that the Retail Sector was the most dependent employment sector for short-term high-cost lending. Out of the applications, 36% came from this sector. This was followed by the Hospitality Sector (14%), Healthcare (12%) and the Public Sector (11%), including 5% working at Councils.

CashLady - operated by Money Gap - and FairQuid, the two organisations behind the data reveal, have said they hope their joint study will show that the high street banks have failed their customers nationwide and believes the government needs to tackle the UK’s dependence on short-term high-interest borrowing.

FairQuid, the brainchild of ex Booking.com’s Vishal Jain and ex Citibanker Paul Salariya, works together with employers to connect employees with Credit Unions offering low-interest savings & loans.

Their data also showed that the amount most people need in an emergency is only 6.8 days of wages and the average time they had been with their current employer, at the time of application, was a stable 46 months.

FairQuid CEO Vishal Jain, said: “While a few UK government programmes were successful in implementing “behaviour nudges” to incentivise long-term savings, e.g. automatic pension enrolment or help-to-buy scheme, there is no strong strategic initiative to nudge people to save up for a rainy day.

“People go to payday loan companies for small amounts because they have no savings or safety nets. But with our nudged savings offering, they end up saving two weeks’ worth of wages by the time they repay a loan, dramatically reducing the cycle of persistent debt caused by the lack of savings.

“While big banks scoop £2.3bn a year in fees only from overdrafts, with a third of the money coming from the sky-high charges on unarranged overdrafts. Only a mere £9m (£4m by Barclays and £5m by Lloyds) support was provided to community-driven credit unions to help those in need. This can’t be right.”

Money Gap Managing Director, Chris Hackett added: “The message from our statistics is clear – there is a severe and growing challenge for millions of people in the UK who face regular economic challenges.

“Our customers are all employed people, yet they lack solutions to avert short-term budgeting issues.”

This was posted in Bdaily's Members' News section by Jane Crosby .