Lender claims its product will be unlike other payday loans as "there are no extra charges whatsoever"
The door-to-door lender Provident Financial will next week start to advertise its new online lending business that the Bradford-based business insists is the antidote to payday loans.
Known as Satsuma, the online lender will employ 50 people by the end of the year and offer loans at an annualised rate of interest of 792%.
Mark Stevens, managing director of Provident Financial's consumer credit division, insisted Satsuma was unlike other payday lenders as repayments on loans were made weekly and that there would be no extra charges for late payment.
From April 2014 payday lenders will be regulated by the Financial Conduct Authority, the City regulator that has already set out rules restricting the number of times a loan can be extended and how many attempts a lender can make to recover payments.
Stevens also insisted that applicants for Satsuma loans will be contacted to discuss their suitability for the product. "We are applying the home credit DNA – no late fees, certainty, personal service – in the online market," he said.
"The problems with payday mean it may not be the right choice for everyone and payday does not work for people with little leeway in income," he added.
Campaigners against payday loans have called for restrictions on when adverts are shown and tougher affordability checks in an attempt to prevent customers being over burdened by debt. There is evidence that more people are running into difficulty, according to campaigners such as the StepChange debt charity that was contracted by almost the same number of people looking for help in the first six months of this year as the whole of 2012.
Satsuma insists "there are no extra charges whatsoever" on its loans, adding: "Customers will never pay a penny more than what's been agreed at the outset, even if their circumstances change."
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