Christmas is upon us again – the time of year when consumer marketing goes into hyper-drive.

For many, the irresistible compulsion to overstretch not just our waistbands, due to gluttonous consumption of turkey and festive treats, but financially is at its peak.

Without aiming to sound bah, humbug, this year is probably a period in which living beyond one’s mean is at the forefront of the modern zeitgeist.

Governments, companies, and individuals are all too aware at this point in history what is meant to become overburdened by debt.

Having said that, though, the downside of the current economic malaise is that many people, in the UK at least, and perhaps denied access to a line of credit from more traditional means, are turning to modern day loan sharks – payday lenders.

As the perceived obligation of Christmas shopping weighs on consumer budgets, the appeal and in some cases the brutal need, for short-term payday loans rises despite the staggeringly high interest rates they offer.

But are these high-interest loan operators sufficiently regulated or are they simply taking advantage of people’s cash shortages to line their own pockets?

Of late, payday loan providers have been under fire as trade bodies, MPs, and the press is speaking out about the regulation around such entities.

As Christmas nears and consumers’ pockets dry-up, short-term money lenders, sometimes dubbed legal loan sharks, are seeking to profit at the expense of borrowers who risk racking up potentially significant levels of debt.

Personal debt in the UK is a major issue and unsecured lending to individuals, excluding credit cards, has been on the increase throughout the year, alarmingly against a backdrop of rising unemployment and low economic growth.

For the 12 months to September 2011, this type of lending saw an increase of 2.1%; translating to a staggering £400m.

The legal loan sharks will only add to this debt as reports suggest 3.5 million people expect to borrow money from such firms over the next six months.

In offering to lend cash to tide people over until payday, a number of these companies promise to transfer money almost instantly into an account. “60-second application” and “cash sent within 15 minutes,overstatement” they say, trying to tempt people into borrowing money.

The representative APR quoted on such money lenders’ websites range from 260.2% to a shocking 4,214%. This means that someone who borrows £265 for 18 days is liable to pay £318.52 by the end of that period.

Should that person not have the money available by the end of those 18 days, then additional charges will obviously be made.

Labour and Co-operative Party MP Stella Creasy is lobbying for better regulation of these entities and says Britain is being “bled dry by the legal loan shark industry”.

Perhaps an overstatement, but certainly it’s an industry having an impact on the already poor and desperate end of society.

Creasy is asking people to sign a petition calling for the government to introduce caps on the cost of credit. The petition “condemns the government for continuing to delay action on regulating the high-cost credit market” and asks for appropriate measures to be put in place before Christmas.

Arguably, Creasy is right in the sense that some form of additional regulation is needed.

The Consumer Finance Association, the trade association which represents payday loan operators, claims that the regulation of these businesses is covered by that of the lending process rather than the products themselves.

Although, according to the CFA, this ensures “everything is covered” the fact that the individual products are not subject to specific regulation suggests that operators in this space have more so-called ‘wiggle room’ as they are less tightly reined in than their counterparts in other parts of the financial industry.

In response, the government is said to have commissioned research into capping the costs of credit.

But the government is not due to report back until late 2012, by which time some of the UK public will have sunk themselves deeper into a personal debt hole.

A jolly Christmas perhaps, but a bleak new year ahead for some.

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