by Stella Creasy
For some time now I’ve been challenging this government to take action on the cost of credit, highlighting the urgency of doing so as many families in Britain now find themselves turning to high cost credit lenders to make ends meet. We know the market is stacked against the consumer, and as it strengthens in Britain we are starting to see the consequences. This month R3 found that of the 46% of households that cannot cover their outgoings with their incomings, 10% are falling into debt directly as a result of repayments on high cost credit products.
This is no longer an issue solely affecting the poorest areas of Britain. Whether payday loans, hire purchase agreements or doorstep lending, the high interest rates and penalty charges these firms charge are hurting families in every constituency. These so called legal loan sharks are rapidly expanding their operations in the UK, taking advantage of the lack of regulation and growing demand for finance as the cost of living climbs and wages are frozen.
Ministers from both the treasury and the department for business, innovation and skills agree the way in which this market operates is a problem, but reject calls to introduce caps on the charges these companies can make. Instead they’re hoping the market will reconfigure itself through a growth in credit unions and increasing information on the costs involved to consumers. It would be easy to dismiss them out of hand as uncaring, blind to the plight of families caught in a cycle of debt to these companies.
