CONCERNS about the dangers of payday loans have prompted an extensive review of the practice.
The review, which will be carried out by the Office of Fair Trading (OFT), will look at claims some payday lenders may be taking advantage of residents in financial difficulty.
The loans are regarded as a quick-fix to money issues, but some use aggressive marketing strategies and add astronomical rates of interest on to repayments.
Financial services experts on the Fylde coast are now eager to bring an end to payday loans.
Dean Stockwell, a debt advice manager for Blackpool Advice Link, said: “Payday lending is a great trouble to us and I hope the review addresses some of the problems.
“The loans are seen as an easy answer and the speed you can borrow money is quite frightening.”
Blackpool FC are currently sponsored by loan company Wonga.
The firm can supply those in need of fast cash with up to £1,000 with an APR rate of 4,214 per cent set on repayments.
Mike Barry, from Blackpool Fylde and Wyre Credit Union, added: “We see people who are stuck in the payday loan trap come to us with six or seven payday loans they have to pay off.
“All of their monthly income then has to be put forward to pay off the debt.”
Evidence gathered during the review will be used to boost standards and drive out companies not fit to hold consumer credit licences.
Blackpool Council leader Coun Simon Blackburn said: “We have a strong and growing credit union, which offers low-cost loans to those in need, while offering savers rates of interest which far outstrip those paid on the high street.
“I’m confident through further investment, and by working with the Government and the Financial Standards Authority (FSA), we will be able to grow the credit union substantially in the near future, thereby virtually eliminating the need for payday lenders here in Blackpool.”
A spokesman for Wonga added: “We offer a transparent and flexible alternative to payday loans our customers really appreciate and we’ll work with the OFT during the review.”