Concerns regarding unemployed people's ability to repay payday loans have been raised by the Consumer Credit Counselling Service (CCCS).
Intended to tide the borrower over until when they are paid, payday loans are being increasingly used by those out of work.
The Service has called for more protection to be given to the jobless who take out the high interest loans, by means of a code of conduct. Currently there are no restrictions in place to stop payday lenders offering credit to an unemployed person.
Under the new proposals, payday lenders will be obligated to perform affordability checks to assess whether borrowers can make repayments and avoid getting into further financial difficulty.
"Unemployment is the biggest single driver of debt problems in the UK, and people who have lost their job after taking out extremely expensive payday loans are finding it particularly difficult to cope," said Delroy Corinaldi, of the CCCS.
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