Last updated at 16:40, Monday, 11 March 2013

THEY offer desperate people what many other financial institutions cannot – quick, easy cash just when it is needed most.

CAMPAIGN TRAIL Furness Sharkstoppers’ Brendan Sweeney, Emma Rawlinson, Barrow and Furness MP John Woodcock, group leader Charlotte Smith and Councillor Frank Cassidy outside The Forum in Barrow in a bid to raise awareness of the possible costs of short-term “payday loans”

Whether the gas is about to be cut off due to an unpaid bill or a bad credit history has mainstream banks running a mile, payday lenders can help.

In less than an hour, any one of the dozens of high street or internet-only operations can sort out a short-term loan of hundreds, if not thousands, of pounds.

But these loans – designed to bridge the gap between pay cheques, typically for a period of 15, 28 or 31 days – come with no shortage of strings attached.

Fall behind on your repayments and in next to no time you can find yourself in a hole far deeper and darker than the one from which you were trying to climb out of.

The exorbitant charges and interest rates has seen them likened to “legal loan sharks”.

It is for this reason that Furness Sharkstoppers was set up late last year by local volunteers concerned at the impact high-cost credit was having on struggling residents in the area.

Backed by Barrow and Furness MP John Woodcock, the group aims to raise awareness about the potential pitfalls of these schemes.

On March 22, it hosts an event at The Forum in Barrow bringing together numerous organisations, including the Citizens Advice Bureau, Age UK, Impact Housing and others, to provide expert advice on debt, finance, unemployment and more.

Furness Sharkstoppers group leader Charlotte Smith, of Ulverston, said the recession meant mainstream lenders were less willing to hand over their money, making high-cost credit outlets an attractive option for many.

She said the group wanted to make people aware of just what they could be getting themselves into by committing to a payday loan.

“It just came about after a few of us, through our work and personal lives, realised how big the problem of high-cost credit was in our community,” she said.

“We’ve come across people in really quite severe debt as a direct result of having taken out agreements with these companies.’’

On Wednesday, the Office of Fair Trading released a scathing report into the £2bn industry that found “widespread irresponsible lending” practices among the 50 largest companies.

OFT chief executive Clive Maxwell blamed the lenders for causing “misery and hardship for many borrowers” and gave them 90 days to change or face losing their licences.

Payday lenders deny any impropriety and maintain that four-figure annual percentage rates are not an accurate indication of the true cost of a short-term loan.

A spokeswoman for Wonga explains on the company website why the often-quoted 4,214 per cent interest rate is misleading as it is generally applied to long-term loans of a year or more, not payday loans.

“Sometimes it shocks people,” the spokeswoman said.

“We actually charge interest of 1 per cent a day for small loans of up to a month.’’

Mr Woodcock, who will be holding an advice surgery at the March 22 meeting, said payday lenders had the potential to exacerbate financial issues faced by families.

“Figures recently published showed that one in five children in Furness are living below the official poverty line and high-cost credit can often compound problems for families and individuals facing appalling hardship,” he said.

“I fully support the Sharkstoppers campaign and I feel sure the event will be helpful to many Furness people who are burdened with money worries and other concerns.”

• The “Making Our Money Go Further” event will be held at The Forum in Barrow on Friday, March 22 from 11am to 2.30pm.

First published at 16:07, Monday, 11 March 2013
Published by http://www.nwemail.co.uk