Consumers Being Forced Towards Illegal Loan Companies
Over the course of the past twelve months or so, it has become increasingly difficult for a potential borrower to be able to be accepted for the personal loan they require through the more traditional lending channels.
Due to the effects of the credit crunch and economic slow down, banks and building societies have become extremely reluctant to offer loans to customers and many specialist loan companies, dealing in areas such as self certification and bad credit loans, have either severely restricted their product range, or simply ceased trading altogether due to not being able to obtain funding themselves in the harsh economic climate.
The Association of Finance Brokers (AFB) has now called on the government to introduce the regulation for the secured loan market, which they have been discussing for several months now, as soon as possible. The AFB are concerned that many potential borrowers who may no longer be able to obtain a loan through traditional routes are now turning to illegal loan companies in order to get the loan they require. They also want the regulation to encourage legitimate lenders to start offering loans once again to those individuals who need them most, even if they have a less than perfect credit history.
Robert Sinclair of the AFB said “there is still a surplus of customers who want to borrow. The vast majority of these are not debt distressed individuals hooked on credit. Many are people in need of refinancing to sort out temporary cash flow problems. It is good news that the Financial Services Authority is considering regulating the second charge lending industry. It would be seen as a positive step by consumers and consumer groups and we have campaigned for this for some time.”
