Posts Tagged ‘Financial Services Bill’

This government is abandoning Britain to the legal loan sharks

13/11/2012, 10:50:01 AM

by Stella Creasy

Today’s evidence from R3, the insolvency practitioners, that the rapid and rabid growth of Britain’s payday loan industry is leading people to go hungry in order to repay these debts, is saddening but not surprising to me. For two years now along with many others I’ve been trying to warn the government that they needed to protect British consumers from these legal loan sharks- and for two years they have found excuses not to do so. Now as debt engulfs the household budgets of so many, we see the consequences of their choice to do nothing.

As the government tries to claim Britain is now on the up, we ignore how people are coping with the financial hardship of the recession at our peril. ONS data shows families are being squeezed much more this time than in previous eras, as they experience both falling household incomes and rising inflation. Predictions are wages will stay flat for years to come, offering little respite to which to look forward.

Dismissing the consequences of this as some in the government have done by telling people they should ”live within their means” misses the point. Too many in Britain, both in and out of work, cannot make their incomes meet the basic costs of everyday living. Research by Which? published last week found a third of payday loan users had taken out credit they knew they couldn’t afford to repay in order to pay for essentials such as food and fuel.  In the week when British Gas bills will rise again, consumers are looking at the gaps in their budgets and rightly asking when will this all end. With massive cuts in benefits around the corner only adding to the misery they face, it is a question Westminster must answer.


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Your chance to help stop legal loan sharking

01/03/2012, 12:00:57 PM

by Stella Creasy

Legal loan sharks are the Japanese knotweed in Britain’s consumer credit market. These invasive companies flourish by exploiting the demand for credit from families who find their incomes squeezed by the rising cost of living, wage freezes and unemployment and so are forced to borrow to make ends meet.

The government’s refusal to act against this industry means Britain is fertile ground for their loans at interest rates which can run to 16,000%. Yes you read that decimal point correctly.

In the payday loan world, offering money without credit checkswithout advertising the costs and without any responsibility for the consequences is common place. When it comes to these companies, the impact of the extortionate rates they charge on the people they lend to comes second place to the profits they can make.

The chief executive of Wonga paid himself £1.6m last year, whilst Provident Financial posted a pre-tax profit of £162m in the year Britain went back into recession. As quickly as regulators try to address poor practices, another firm springs up ready to benefit from Britain’s dubious honour of being one of the few countries in the world where there is no limit on what you can charge for credit.

For nearly two years I’ve been calling for Britain to introduce total cost caps on the charges these firms can levy, putting a ceiling on the amount any loan could mount up to and giving consumers respite from the spiral of debt these firms can create. Twice now the government has voted against such measures, but as the evidence grows of the damage this is causing to millions of Britons they need us to not flinch from seeking every chance we can to make progress in championing the case for better regulation of these companies.

Such a moment of opportunity is upon us again.


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