Global accountancy body ACCA (Association of Chartered Certified Accountants) is calling for tougher action to help improve the payday lending market, with Northern Ireland being more vulnerable than other parts of the UK due to reduced spending power of local families who have 53% less disposable income*.

A significant number of Northern Ireland consumers are continuing to face growing debt problems with Debt Action NI reporting that it has dealt with approximately £750k of payday loan debt over the past 18 months.

According to research from ACCA ‘Payday lending fixing a broken market’ which examines the payday business model, the lending market is too heavily reliant upon repeat borrowing for profitability. The report highlights that consumer detriment, in the forms of default, repeat borrowing and the taking of multiple loans from different lenders, appears to play a highly profitable role in existing online payday lending business models.

ACCA’s research backs the Financial Conduct Authority’s (FCA) decision to have a cap on the total cost of credit and existing regulation on rollovers, but further suggestions were deliberated at a recent high-level roundtable session in the UK including: workplace loans, credit unions and a discussion around whether charities could team up with banks to benefit from their infrastructure and economies of scale.

Liz Hughes, Head of ACCA Ireland said “In the current financial climate unemployment remains high in Northern Ireland at 7.2% compared to the UK average rate of 6.8% ** and people are finding it difficult to make ends meet.  Whilst ACCA does not necessarily think short-term lending is innately harmful, the current payday lending format is not working. 

“ACCA is committed to acting in the interest of the public to highlight where improvements can be made and enter into meaningful discussions with regulators to make improvements.

“We need to find a more responsible way to meet the needs of short-term borrowers. This will take better regulation and innovation amongst providers of credit.”

ACCA will be hosting a further debate in partnership with the Church of England in the House of Lords in June 2014, and will also be submitting recommendations to the Financial Conduct Authority in the July consultation.

ENDs

For more information, please contact Shane Finnegan or Katrina Frazer at Aiken PR on 028 9066 3000 or email: firstname@aikenpr.comNotes to Editors:*ASDA Income Tracker 2014**Northern Ireland Statistics Research Agency

1. Debt Action NI is funded by Department of Enterprise, Trade & Investment, coordinated by Advice NI and supported by Payplan.  Debt Action NI is open to anyone in Northern Ireland and the advisers provide free, confidential and impartial advice that is open to anyone concerned about their financial situation.  People can access the service by calling the Freephone helpline on 0800 917 4607 between 8am and 9pm Monday – Friday and 9am – 3pm on a Saturday.   They can also visit the Debt Action NI website www.debtaction-ni.net  where they can send an appointment request, email an adviser, chat to a virtual adviser or use the online budgeting tool. There is also have a list of all of the advisers and their contact details on the website. People can also text the word ‘Action’ to 81025 and an adviser will call them back.2. ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.3. We support our 162,000 members and 428,000 students in 173 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. We work through a network of 91 offices and centres and more than 8,500 Approved Employers worldwide, who provide high standards of employee learning and development. Through our public interest remit, we promote appropriate regulation of accounting and conduct relevant research to ensure accountancy continues to grow in reputation and influence.4. Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. We believe that accountants bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. Our values are aligned to the needs of employers in all sectors and we ensure that through our qualifications, we prepare accountants for business. We seek to open up the profession to people of all backgrounds and remove artificial barriers, innovating our qualifications and delivery to meet the diverse needs of trainee professionals and their employers.