Campaign to end legal loan sharking takes a step closer to victory as Government forced to put protecting vulnerable consumers on Credit Review agenda
The Government, bowing to pressure from Labour MPs, campaign groups and debt experts, has at last agreed to consider the case for intervention in the short-term, high-interest credit market.
In a debate at Westminster Hall on Wednesday 9 November 2010, which followed the successful first reading of Stella Creasy MP's Consumer Credit (Regulation and Advice) Bill, a spokesman for the Department of Business, Innovation and Skills acknowledged the widespread concern about exploitative practices in the legal loan sharking market, and accordingly widened the scope of the department's review of credit and personal insolvency.
Stella Creasy, MP for Walthamstow who has led the campaign in parliament on this work and secured the debate, said:
"Thanks to a concerted campaign led by Compass, the Better Banking coalition, the Co-op, myself and others who are determined to protect the most vulnerable from exploitation by legal loan sharks, we have at last managed to pin down the Government and forced ministers to consider this issue. This represents important progress in the fight to ensure that those most threatened by the Government's comprehensive spending review are shielded from unscrupulous lending practices.
Today we secured a significant first step- now we need to make sure the Government doesn't sidestep the case for action. I urge everyone to contact their MP and ask them to insist that ministers take action to regulate the market for hire purchase, payday and doorstep lending. You can also submit evidence to the Government's credit review, by downloading the form at this address: http://www.bis.gov.uk/Consultations/consumer-credit-call-for-evidence We only have until 10 December to let them know that we want to see an end to the exploitative practices that legal loan sharking uses- its upto us to make sure they hear the case for this loud and clear!"
ENDS
- The Government, bowing to pressure from Labour MPs, campaign groups and debt experts, has at last agreed to consider the case for intervention in the short-term, high-interest credit market.
In a debate at Westminster Hall on Wednesday 9 November 2010, which followed the successful first reading of Stella Creasy MP's Consumer Credit (Regulation and Advice) Bill, a spokesman for the Department of Business, Innovation and Skills acknowledged the widespread concern about exploitative practices in the legal loan sharking market, and accordingly widened the scope of the department's review of credit and personal insolvency.
Stella Creasy, MP for Walthamstow who has led the campaign in parliament on this work and secured the debate, said:
"Thanks to a concerted campaign led by Compass, the Better Banking coalition, the Co-op, myself and others who are determined to protect the most vulnerable from exploitation by legal loan sharks, we have at last managed to pin down the Government and forced ministers to consider this issue. This represents important progress in the fight to ensure that those most threatened by the Government's comprehensive spending review are shielded from unscrupulous lending practices.
Today we secured a significant first step- now we need to make sure the Government doesn't sidestep the case for action. I urge everyone to contact their MP and ask them to insist that ministers take action to regulate the market for hire purchase, payday and doorstep lending. You can also submit evidence to the Government's credit review, by downloading the form at this address: http://www.bis.gov.uk/Consultations/consumer-credit-call-for-evidence We only have until 10 December to let them know that we want to see an end to the exploitative practices that legal loan sharking uses- its upto us to make sure they hear the case for this loud and clear!"
ENDS
Notes
Today's Westminster Hall debate on consumer credit regulation organised by Labour MPs was the first time the Government was forced to go on the record about their approach to legal loan sharking. It follows efforts by Labour MPs to introduce legislation to cap the total cost of borrowing charged by any organisation through the proposed Consumer Credit (regulation and advice) bill.
The coalition agreement in May 2010 proposed the following: "We will give regulators new powers to define and ban excessive interest rates on credit and store cards; and we will introduce a seven-day cooling-off period for store cards". Following the intervention of Labour MPs, the Minister responding on behalf of the Government, David Willetts MP, committed at the debate to expanding the scope of the Credit Review to including legal loan sharking practices.
Four in ten people are worried about their current level of debt, with three million fearing redundancy and two million having taken on more debt in recent months. One in ten people frequently struggle to make it to payday, with money tending to run out on the 20th day of the month.[1]
Around three million people use the high-cost door-to-door or home credit lending market. This market can charge £82 in interest and collection charges for every £100 lent.[2] One in ten UK payday customers have incomes of less than £11,100 per year.[3]
Fifteen states in the US have eliminated payday lending altogether either by introducing a ban or capping the maximum charge for credit at a low level.[4]
The Department for Business, Innovation and Skills has issued a call for evidence in support of its Consumer Credit and Personal Insolvency Review. Evidence can be submitted by downloading the form at this address http://www.bis.gov.uk/Consultations/consumer-credit-call-for-evidence and sending it either via email to peter.lovitt@bis.gsi.gov.uk or via post to Peter Lovitt, Consumer and Competition Policy, Department for Business, Innovation and Skills, 1 Victoria Street, London SW1H 0ET. Forms must be submitted before 10 December 2010.
The Consumer Credit (Regulation and Advice) Bill has been tabled by Labour MP Stella Creasy. It follows on from work by the pressure group Compass (www.endlegalloansharks.org.uk), as well as the Better Banking Campaign (www.betterbanking.org.uk). EDM 872 Provision of Consumer Credit Regulation and Advice has been tabled in support of these proposals.
[1] R3 (Association of Business Recovery Professionals), November 2010
[2] End Legal Loan Sharking campaign, 2010.
[3] Policis research for Friends Provident Foundation 2010
[4] Centre for Responsible Credit, September 2010
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Friday 10 December 2010
Campaign to end legal loan sharking takes a step closer to victory as Government forced to put protecting vulnerable consumers on Credit Review agenda - Working For Walthamstow
