Salary advance schemes – lockdown lifesavers or a trap into debt?

Industry News | 18/08/20

Lockdown has been a trying time for millions of workers. Suddenly having to work from home, coupled with worries about future security and finances, have weighed heavily for many.

For an increasing number of cash-strapped workers, the solution has been Employer Salary Advance Schemes (ESAS). Through the likes of Hastee and Wagestream, they can access up to 50% of their wages before their regular payday. However, critics say the services can push consumers into cycles of debt and should be regulated like the payday lenders they aim to replace.

Last month, the salary advance industry was dealt a blow after the Financial Conduct Authority raised red flags over its lack of regulation. It warned of a lack of transparency around costs, and the likelihood of workers making repeat withdrawals and becoming dependent on the services to make ends meet.

Source: The Guardian