Tories refuse to support cap on high interest pay day loans

Less than half of Tory MPs want to impose a cap on pay day loan credit charges that are leaving consumers in crippling debt, a ComRes survey reveals today.

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Only 46% Conservative MPs want to impose a cap on pay day loan credit charges that are leaving consumers in spiralling debt, a ComRes survey reveals today.

Payday-advance-loansThe parliamentary panel survey, commissioned by insolvency practitioners R3, shows that only 33 out of the 72 (46%) Conservative MPs surveyed wanted this change enforced, compared to 90% of Labour MPs surveyed.

MPs will vote later today on Amendment 40 to the Financial Services Bill, which would give the new Financial Conduct Authority the power to cap the charges made for credit and consequently, the cost of borrowing.

Treasury minister Mark Hoban MP said the government supports the FCA’s right to regulate credit charges, but won’t support the amendment, deeming it “not necessary”:

“The Treasury is confident that a range of powers is in place to help people in respect of payday lenders and high-cost lenders.”

The results of a ComRes poll of the general public’s opinion on pay day loans showed that the situation is spiralling out of control and more measures need to be put in place to protect consumers.

 


See also:

Legal loan sharks are licking their lips as the social fund is scrapped 26 Jan 2012

Wonga’s student ‘scam’ comes unstuck 13 Jan 2012

Ignore Wonga’s spin; they’re still targeting students 13 Jan 2012

Wonga target students with friendly advice: Take our 4000% loan 11 Jan 2012

Time to muzzle the legal loan sharks 12 Dec 2010


 

The poll revealed 3.5 million people were considering taking out a high-interest pay day loan in the next six months, and that:

60% of those who have taken out a high interest loan regret the decision.

48% of those who have taken out a high interest loan believe it made their financial situation worse.

• Only 13% of those who had taken out a pay day loan felt it had had a positive impact on their finances.

Labour MP for Walthamstow Stella Creasy has been campaigning for a cap on pay day loan credit charges since 2010.

On this morning’s Today programme, Creasy said:

“Interest rates in this industry can range from 22% to 16,000% for short-term loans. One in three payday loans is taken out to pay off another payday loan. People are drawn into spiral.

“Which? research shows one in three who take out payday loans get into financial difficulty as a direct result. It is irresponsible of the industry to pretend that there isn’t a problem. That’s why politicians need to act.

“America has lots of different types of capping. Britain is unusual in that it doesn’t. Most countries combine caps and consumer protection with a payday loan market.”

While Frances Coulson, president of insolvency practitioner R3, commented:

“Payday loans are not the best way to resolve debt struggles. We know that many who take them out find them to be a negative experience, often escalating financial troubles.”

By opposing this amendment, the government are turning their back on those suffering in debt and favouring money-hungry loan companies.

 


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55 Responses to “Tories refuse to support cap on high interest pay day loans”

  1. IRejectFPTP

    Tories refuse to support cap on high interest pay day loans, reports @KatieDagger: http://t.co/ZbmFhplS #Wonga #LoanSharks

  2. Evan Price

    Extortionate credit bargains are already unlawful at common law – in my view the problem, correctly identified by Stella Creasy and others, is that it is very difficult to establish that any particular credit bargain is extortionate.

    Personally, I agree that there ought to be a statutory limit on what interest rate can be charged. In addition, as someone who acts in the Insolvency courts, I would favour a simple statutory limit for consumers and allow debtors to apply to the court to rectify any excessive interest charge. You would need to consider what to do about administrative charges – but that would not be insurmountably.

    BTW, I am a Conservative and have been arguing for this for more than 10 years!

  3. DianeLaw

    RT @leftfootfwd: Tories refuse to support cap on high interest pay day loans http://t.co/LoM4uAvP <—–no surprises there then!

  4. Victor R. Smith

    Tories refuse to support cap on high interest pay day loans, reports @KatieDagger: http://t.co/ZbmFhplS #Wonga #LoanSharks

  5. Anonymous

    We can have your Tyrants and Demagogues force through corporatist policies which you can’t buy in Parliament.

    “Cap tax”, end the NHS, pensions, fire service.
    “MP’s salaries”, so only the rich can afford to be MP’s.
    “Taxation”, to ensure NO social program survives.
    “Debts”, to make sure the economy for the 99% crashes and burns.

    Although I suspect the anger against your 1% might come as a small surprise to you.

Comments are closed.