UK Mortgage Advice in Liverpool CEO Max Erskine backs the Shadow Chancellors comments he made at the Association of British Insurance conference in London.
Liverpool, UK -- (ReleaseWire) -- 07/11/2013 --Ed Balls says ”Financial education for adults is vital to stop consumers falling into payday loan traps“ Balls said that regulation and consumer protection around payday loans and lending could only go so far in helping the public avoid making the wrong loan choice while education would create a grown-up society of sensible decision makers.
He said: “Savings are a good thing but having loans is part of life, like having a mortgage or a loan for a car. Most people don’t get into distress because they have borrowed too much, it is because they borrowed what seemed like a proper amount at a time when they had stability in their lives but the loss of a job, an illness to a family member or the break-up of a relationship suddenly transforms the situation. Panic sets in and they borrow more to get out of the situation which makes it worse.”
Max Erskine of UK Mortgage Advice Liverpool, says “We are starting to see the same trend within our clients who, unfortunately take out these high interest loans without taking any financial advice or guidance, we strongly advise our clients to contact us before any decision is made. On numerous occasions we have capital raised through remortgaging, as this is the most cost effective route for most of our clients.”
Erskine also agrees with Balls in that, too much regulation may exacerbate the problem by forcing troubled consumers down even higher risk routes.
He said: “I’m all for the tougher regulation of payday loan companies but I also know that there can be huge dangers in driving people into illegal loans and lending from loan sharks so we have to be careful of the unintended consequences.
Payday loans are currently regulated by the Office of Fair Trading but the regulatory responsibility will pass to the Financial Conduct Authority from 1 April 2014.
About ukmortgageadvice.org.uk
UK Mortgage Advice are expert mortgage brokers that offer free independent mortgage advice across the UK they use whole of market sourcing to find their clients the best mortgage deal.