1. The UK Government’s Delicate Position
on Payday Loans
A discussion on payday loans in the UK has emerged
The Payday loan companies in the United Kingdom are being encouraged by the UK government to
continue demanding extortionate interest rates on their loans.
After a public promise to intervene while under pressure from critics, the UK government have again
risked their credibility by backing the payday loan companies and refusing to order an interest rate cut
on payday loans.
The loan companies contend that their own internal regulations are being improved and they will
endeavor to do more to assist their paying customers.
Jo Swinson, the Government Minister responsible, implied that without access to legal loans, the mass
of consumers will move towards illegal lenders who tend to be outside the realms of government
control.
Clearly, it is not in the interest of the UK Government to lose track of its rightful revenue from a 2 billion
pound industry.
These loan companies are richly continuing to offer a small loan to the consumers who are providing
their bank account details and giving permission for the loan companies to access the account. A small
loan, usually up to one thousand pounds is deposited into the customer's bank account.
The expectation is that the customer's regular income will be paid into their bank account and the loan
company will access the account directly to withdraw the funds that it has supplied as the loan, as well
as the added interest charges.

2. The huge problem arises when the expected funds are not available in the customer's bank account. The
loan company will then load up the interest charges. A loan of two hundred and fifty pounds that is
unpaid after a year could result in interest charges that exceed ten thousand pounds.
With the effects of the economic situation, many families in the UK are having a tough financial time.
They are relying on these “Go Here Payday Loans” to pay other loans burdens or have quick access to
needed cash.
The number of families who rely on these loans to afford the basics every month could exceed one
million, according to a published study by the 'which' consumer organization.
The high street banks will not step in to resolve the situation. The consumers who are likely to use
payday loans are not the type of consumers that the banks want to loan money to. These consumers'
bank accounts are usually low funded and unprofitable for the banks. The risk of a loan not being repaid
and resulting in legal action is high.