Despite the payday loan industry promising to clean up its behaviour, Citizens Advice evidence shows that payday lenders have broken their promises. We know councils are concerned about the impact of payday lending on their communities so this month we are hosting a series of guest blogs from councils, in which they talk about the work they are doing to tackle irresponsible lending practices.
Please note: Any opinions expressed within the blog are those of the author and not necessarily held by Citizens Advice.
Poverty is the biggest challenge our city is facing and one which we are determined to tackle head on. The success of Leeds, its people, communities and economy is dependent on our action.
Why is it important?
The difficult economic climate and the introduction of changes to welfare and benefits has significantly impacted on people’s incomes. At the same time, the payday lending industry is growing fast. The Office of Fair Trading estimate that the value of the payday lending market has increased by 60% between 2008 and 2012, from £900 million to an estimated £2.2 billion.
As a result we are seeing more evidence of people, often the most vulnerable in our society, finding themselves with serious debt problems after taking out loans from payday lenders. This is an industry which must face greater controls over their operations, but, until they do, we feel that it is necessary to take action.
What have we done?
Much of the success of payday lenders is due to their high profile and high cost marketing campaigns. As a local authority we do not have the financial resources available to launch a counter campaign. However, we do have an extensive network of partners to provide coordinated action. Over the past decade in Leeds we have forged a successful financial inclusion partnership. The work to tackle high cost and payday lending is therefore well supported in the city. We also have the advantage of a sympathetic media, who have been increasingly focussing on the negative experiences of people using payday lenders.
Any action taken must maximise these assets to make the greatest impact possible. Our five key actions to date have been to;
1.Make a statement: We blocked the websites of all known payday lenders from council computers. We decided to undertake a joint campaign with our neighbouring West Yorkshire authorities and York City Council to gain maximum publicity. Internet pages now redirect explaining why the sites have been blocked and alternatives are given. National and local media covered this story.
2. Spread the word: We held a national conference launching our campaign encouraging delegates to Take A Stand against High Cost Lenders. A web site has been set up and a film produced to highlight the dangers of high cost lending.
3. Use our assets: Leeds United, Leeds Rugby and Yorkshire County Cricket Club have signed up to the campaign and have declared themselves “high cost lender free zones”. The Students Unions at both the University of Leeds and Leeds Met University have also announced the banning of all advertising of high cost lenders within their facilities.
4. Coordinate: An advisory group with representation from the public, private and third sectors has been set up to oversee the campaign and ensure a co-ordinated approach.
5. Build capacity: Expanding the capacity of our credit union to offer banking and credit facilities to those who previously had to rely on high cost lenders. Initiatives include; neighbourhood branches and access points, a new loans shop and the development of an affordable payday loan product. Alongside this expansion a review of money advice services in the city is being undertaken, in order to develop a more integrated service, delivered in areas of the greatest need in the city.
Take a stand
Leeds City Council and partners have committed to tackle the issue of high cost lenders. We want to encourage you to do the same. The cost of this market isn’t just a cost to some individuals; it’s a cost to our society which affects us all.