A coalition of citizens groups, MPs and campaigners have called on the government to end legal loan sharking.
A coalition of citizens groups, MPs and campaigners have called on the government to end legal loan sharking. At present, there is no limit on the price lenders can charge for credit – resulting in some companies charging £82 per £100 loaned and annual interest rate charges of 2,500 per cent – trapping vulnerable customers into cycles of debt and poverty from which they cannot escape.
The campaign coalition is calling on the government to ban excessive prices for credit and provide alternative sources through community development financial institutions, credit unions and a post bank. Currently, £16,000 of excess profit is made every hour in the credit lending sector, according to the Office of Fair Trading.
Gavin Hayes, general secretary of Compass (who are co-ordinating the campaign), said:
“Door to door lenders are now charging £83 for every £100 borrowed, whilst some online pay day lenders charge a whopping 3,000 per cent APR.
“This is legal loan sharking, a national scandal which must come to an end. Now is the time for caps on all consumer credit and real affordable alternatives through a post bank”
Lisa Nandy, Labour MP for Wigan, added:
“The government has committed to curb excessive rates on store and credit cards but not high cost credit. This means the 3 million people who use high cost credit will have no defence against their excessive profiteering.
“We need to ask, is the government looking out for the middle classes and ignoring the needs of the poorest borrowers?”
• To sign the petition, go to www.endlegalloansharks.org.ukLike this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.