The Tories’ volte-face on payday lending

Previous attempts by Labour at capping the cost of payday loans have been defeated in the Commons by...the Tories; with the aid of their Lib Dems partners, of course.

It has been announced today that the government is to introduce a cap on the cost of a payday loan.

The cap will target the overall cost of credit, and include controls on charges, penalty fees and interest rates, according to chancellor George Osborne.

The policy has been warmly welcomed by campaigners, and Tories on Twitter this morning have been warmly congratulating themselves over their chancellor’s announcement of a policy that will help to stop the poor getting fleeced by uncrupulous legal loansharks.

Tory MP 1

Tory MP 2

God bless those ‘hardworking people’.

And yet previous attempts by Labour to cap the cost of payday loans have been defeated in the Commons by…the Tories (with the aid of their Lib Dems partners, of course).

In May of last year, MPs voted by 266 to 225 – a majority of 41 – to reject Labour MP Stella Creasy’s attempt to allow the authorities to cap the total cost of credit. A Comres survey at the time also revealed that only 46 per cent of Tory MPs wanted a cap imposed on payday loan credit charges.

Only three Conservative MPs – Zac Goldsmith, Mark Reckless and Philip Hollobone – supported the proposed changes to the Financial Services Bill which would have capped the total costs that can be charged for payday loans. Not a single Lib Dem MP backed the amendment.

It’s difficult to fathon why the cap is such a good idea now but wasn’t earlier.

6 Responses to “The Tories’ volte-face on payday lending”

  1. Kevin Leonard

    They (the coalition) could never support any idea of a cap on lenders until they had permission to do so off the lenders themselves which they now have after selling off the student debt to them as a replacement source of income.

  2. Sparky

    Never happy, are you?

    The government doesn’t do something -“Why won’t it listen to reason?” The government does something -“Why didn’t it do something before?”

  3. Tim Harding

    Just because this Bill achieves the same result as Stella Creasy’s, does not mean it’s the same thing. The devil is in the detail. No conspiracy, no change of heart, simply a better bill that the members found themselves able to vote for.

  4. TM

    ‘It’s difficult to fathon why the cap is such a good idea now but wasn’t earlier.’
    I believe the expression is ‘political expediency’. They have seen the writing on the wall basically; or perhaps on the forums and blogs and everything else that condemns them as heartless and merciless and that everyone and his dog will vote Labour just to see the back of them all. Only now have they got a conscience?! What a surprise there hey?! Election time getting closer is it?

  5. Gary Urquhart

    I agree about waiting to see details. But we on the left cannot be so smug. the last Labour government said this in the FAQ’s to the 2006 Consumer Credit Act:-

    8. Will the Act introduce maximum limits on interest rates for consumer credit?

    No, the Government has decided not to introduce an interest rate ceiling on the basis of research by Policis (an independent company) on the effects of maximum limits interest rates in other countries.

    This was on 8 August 2007 after hundreds of us had asked them to sort it out. So let’s just remember this kind of thing when we are back in power

    http://webarchive.nationalarchives.gov.uk/+/http://www.dti.gov.uk/consumers/consumer-finance/credit-act-2006/FAQs/page24450.html

  6. Chris Kitcher

    I don’t believe any of the bast##ds. This makes good headlines at the moment but once with the FSA it will all conveniently forgotten.

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