You may not necessarily associate payday loan companies with the words 'ethical' but nevertheless, that's what payday lending company fridayfriday.com states. They promise to limit the usage of the controversial roll over loans whereby the borrower is given a new loan as soon as the old one ends, thus keeping them in a cycle of debt. This means that if true, then the company is adopting a less aggressive stance to lending.
Jason Gardiner founder of loan company fridayfriday.com states that if borrowers are to extend their loans, they will place them on a single rate of 30% for six months. The maximum number of loans a person can take out consecutively equates to 3 and will charge around £25 for every £100 borrowed in interest.
Jason continues "it's certainly not in our interest to pile on the fees which will inevitably put borrowers into more difficulty. "For people who are late in paying, we will give them weekly reminders instead of turning up on their doorstep or hassling them at work".
However, Una Farrell of the Consumer credit Counselling Services states that "this so called 'gallantry' hardly qualifies fridayfriday.com as an 'ethical' provider"
She goes on to say that "whilst limiting the number of roll over loans is a step in the right direction, the amount paid in interest is still extremely expensive, especially when in some cases you can borrow up to £1000". Una goes on to say that "paying 30% interest every time you borrow £1000 is likely to bring debt and despair for those who are already experiencing financial difficulties."
Over the past few years there have been many companies setting themselves up as 'payday lenders and now the Office of Fair Trading has had to step in to investigate. In the past lenders have been criticised for targeting the old and vulnerable. In addition payday loan companies have been criticised by the credit reference agencies for not letting them know when customers are 'to all intent and purpose' building up debt.
Mr Gardiner of fridayfriday.com goes on to say that "it is understandable as to how this industry has a bad name and as a result the industry as a whole needs regulating. In addition loan companies need to pass on the details of consumers to credit ratings agencies"