Payday loans have been named as the ‘unhealthiest’ form of credit available in the UK, in a report launched last week.
A report by the Royal Society for Public Health (RSPH) reveals how the growing high cost credit sector ‘is having a destructive effect on mental wellbeing’ and is affecting the lives of some of society’s most vulnerable people.
Of the forms of credit available payday loans ranked as having the most negative impact on mental wellbeing, followed closely by unauthorised overdrafts, doorstep loans and weekly payment stores.
The ‘Life on Debt Row’ report is the first time a major public health body has holistically documented the impact different forms of credit have on health and mental well being, with more than 500 borrowers asked about the impact of different forms of credit.
Those who have used at least one pay day loan said they felt more judged and spend more time alone as a result of ‘distress or depression’ than the average credit user.
‘Times in debt to payday lenders were the periods I felt most depressed, out of control, and certainly most worried about the knock on the door’, one respondent said.
The RSPH are now calling for action from the government and the credit industry to ‘protect the health and wellbeing of credit users’ by ending the use of targeted marketing of high interest loans to vulnerable people, as well as, highlighting the possible negative consequences of problem debt.
They are also calling for better signposting to debt and mental health services by lenders, health services, local authorities and universities.
Prof Sarah Niblock, UKCP’s Chief Executive, said: ‘We’ve been saying for a long time that depression doesn’t mean something is wrong with you. It’s far more about what has happened to you, financial crisis being a key example.
‘It’s perfectly natural to feel stress, anxiety or depression when faced with acute hardship.’
She added: ‘The government and financial sector must urgently rethink the rules because the cost on individuals, families and society will otherwise be far far greater, for generations to come.’
This is the second time in a week that the high cost credit sector has been in the spotlight. Last week, actor Martin Sheen announced he has decided to scale back his acting work to campaign against high cost credit providers.
Last Tuesday the actor launched End High Cost Credit Alliance, a campaign group that aims to tackle high cost credit, and promote fairness and more affordable credit options to suit lenders and the people they serve.
‘I’ve become increasingly aware of friends and family dealing with being in debt – with overdrafts, credit card payments, pay day loans, home credit,’ the actor told the Guardian.
‘It’s a really hard subject to talk about but I’ve had friends breaking down in tears talking about how it is affecting their relationship, their self-esteem, their children’s lives. It touches buttons about your own sense of dignity and pride,’ he added.
Sheen welcomed this latest report by RSPH. He said: ‘As a society we believe in justice and compassion and yet problem debt is pulling more and more people into poverty, taking a hold on their physical and mental health. That is not acceptable’.
‘We share a moral responsibility to help protect vulnerable customers from the harm high-cost credit causes. The evidence on the impact on our health and well-being is now overwhelming. We have the evidence. Now we need action.’ He added.