FridayFriday founder, Jason Gardiner, has launched an attack on the industry and criticised many of its competitors for what he described as ‘unethical practices.’
Despite being part of the industry, the FridayFriday boss has attacked the payday lending industry for taking advantage of vulnerable customers and routinely engaging in ‘unethical practices.’
Mr Gardiner said that he would actively welcome more involvement from the regulator, in a bid to clean up the industry and stop rival firms from adopting practices which damaged the reputation of lenders. He was particularly critical of payday loan firms which allowed debts to ‘roll over,’ one of the main ways balances can quickly accumulate, spiralling into a loan which becomes unmanageable.
The head of FridayFriday said that he believed many payday lenders were simply looking to ‘maximise their returns’ by slapping customers with ‘additional charges and interest,’ when debts had reached default stage. Mr Gardiner said he did not believe this was helpful, describing the end result as ‘more debt and certainly a lot more stress’ for the customer.
Payday loans are designed to be an emergency solution to short-term cash flow problems but research has shown that households are increasingly relying on them, because they cannot access other forms of borrowing – which can lead to a spiral of payday loans debt.
Mr Gardiner said that allowing customers to keep borrowing, or rolling over the loan without receiving a full repayment, created a debt cycle where the original amount of finance multiplies several times over. He described this as a ‘long-term debt nightmare’ from what should simply have been a ‘short-term financial solution.’
Charities have repeatedly campaigned against the practices of the payday lending industry and the decision about whether to cap interest or fees has not yet been finally agreed by ministers.