Tighter regulations and stricter planning procedures will help limit the numbers of new payday lenders on
The measures which are designed to minimise the presence of payday lenders in communities are set out in a new 12 point
The plan is a result of
The preventative measures also include the introduction of a new Financial Health Service which will serve as a one-stop-shop for money advice services, and there is an emphasis on promoting credit unions.
Launching the plan on a visit to the
"This action plan reinforces our commitment to addressing the problems associated with payday lending and sets out a number of actions that we will undertake across a range of policy areas.
"Payday loan companies are not only blighting our high streets but they are exposing people to financial credit they just cannot afford.
"Bringing the industry together at the Payday Lending Summit was a real opportunity to share ideas and discuss ways of reducing the problem of payday lenders in town centres.
"I won't pretend that this action plan will solve the problem overnight but it's a step in the right direction. Through legislation we will remove some of the exemptions from planning control on premises that sell pay day loans. This will allow planning authorities to implement policies addressing future clustering and over-provision of such activities. The planning proposals also include similar changes regarding controls on betting shops.
"We're making conditions tougher for payday lenders by excluding them from small business bonus schemes and working with the
"We're taking steps to tackle the issue of problem debt through legislation such as the Bankruptcy and Debt Advice (
"Our new Financial Health Service website will bring together different strands and sources of information and advice, so that anybody with a concern or an issue to do with debt or borrowing can find, in one place, the help and assistance that they need.
"With our limited powers we are doing what we can, but with independence we could do so much more to act quickly to offer protection to consumers.
"Whilst we welcome the tougher FCA regulatory regime and the consultation on a cap, the
"Tackling the increasing numbers of payday lending businesses will not only stop more people being driven into poverty, but will help give our town centres a sense of identity and be more attractive places for people to live, work and visit."
There are an estimated 180 to 200 payday lenders on
Stewart*, 46, owed
Stewart said: "Although I was working full-time, I found myself relying on credit cards to pay for things like bills and food shopping.
"When my cards were maxed out, I was refused more credit by my bank and offered no help.
"I felt like I had nowhere else to go, which is when I turned to payday loans and I ended up relying on them to get me through."
Stewart was able to take out three payday loans despite already having significant debts.
He also noticed a dramatic rise in nuisance calls, texts and emails offering further loans and debt management services.
He is now repaying his debts through a Debt Management Plan, and says he would never be tempted to take out another loan following his bad experiences.
Stewart continued: "I can remember waking up in the mornings and thinking this is going to be a struggle. I'm really happy now, and going back to that is not something I could even think about."
* Case study name changed to protect identity.
"There has been a proliferation of payday loan shops throughout our communities so we welcome moves to restrict them though the planning process. Accessing loans through a payday lender seems easy when so many shops are on our high streets and lenders bombard us with adverts for credit. But paying back such loans is not always easy and it is often the poor practices of payday lenders that cause problems to occur for people who can easily get into difficulty making their repayments.
"Citizens Advice Bureaux in
"It is often poor practices by payday lenders that cause problems which is why CAS has campaigned for several years now to tackle to the unfair practices of payday lenders and make sure the people of
Anyone who needs debt advice can get free, confidential help from their local CAB or from our helpline on 0808 800 9060.
"This Scottish Government action plan is welcome - anything that better protects consumers from these loans and their potentially damaging repercussions is good news.
"We see too many people falling back on such high cost credit in order to either cope with existing debt problems, or just to make ends meet, often to damaging effect. Taking on this type of borrowing is not a solution to financial difficulty, and instead these people need better protection from the pressures of debt.
"StepChange is calling on policymakers to consider the idea of 'breathing space' - a break from interest, charges and enforcement, where debts can be repaid over an agreed period - so debtors in difficulty don't have to keep borrowing to service borrowing.
"We also need a better short term credit market, where banks, credit unions and employers play a role in providing more responsible sources of loans and we hope the
StepChange Debt Charity Scotland offers free and impartial debt advice and solutions through its freephone helpline (0800 138 1111) and online (www.stepchange.org).
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