I’m throwing my weight behind a Private Member’s Bill that seeks to challenge the unscrupulous practices of high-cost credit companies offering pay day loans. The High Cost Credit Bill will come before Parliament on Friday 12 July. It is sponsored by one of my oldest friends Paul Blomfield MP, and I hope to be there to give my support.
The bill seeks to end some of the worst practices of pay day lenders and help provide better protection for those borrowers struggling to repay their debts. In particular, it will require better affordability checks from lenders, limit the number of times a loan can be rolled over, stop excessive charges for borrowers unable to repay, require earlier signposting to free and impartial advice about debt, and curb advertising for loan companies.
Figures provided by debt charities show that between 2011 and 2012, the amount people in Northfield owed on pay day loans has increased by 20% to an average of £1,612. (1)
Some of the most vulnerable people in Northfield are being saddled with debts they will never be able to pay back. Rogue loan sharks are preying on those in difficult circumstances who cannot get access to credit by other means, such as people on benefits and students. I have heard frightening stories of how a £100 loan can easily spiral into a debt of £10,000 or even £15,000.
We urgently need legislation to help protect borrowers from the sky high rates of interest that these pay day loan companies charge. At up to 4,000% and even more, it is simply nothing other than legalised extortion. The Government has said it will cap the amount pay day lenders can charge, but the scandal of exorbitant interest rates carries on. That is why I welcome this bill and will give it my full support.
If there are MPs who oppose the Bill they should say so. The danger is, however that they may try to kill this Bill by the back door through trying to talk it out. That would be an insult to the people who suffer at the hands of loan sharks –legal ones or illegal ones.
Along with the growing number of people having to turn to food banks, rising rents and food prices, and the spread of in-work poverty, the increasing number of people in ever higher debt because of pay day loans is yet another unwelcome result of this government’s disastrous economic policy. The value of the pay day loan market was £900 million in 2008/09. Under this Government, it increased to £2 billion in 2011/12.
Have you been affected by the practices of pay day lenders? Please get in touch.
- Figures from StepChange Debt Charity: www.stepchange.org
