Poll Shows 7 in 10 Demand Lending Interest Rate Cap To Cover All Forms of Credit

By: Submissions

A new poll has found overwhelming public support for stricter limits on the cost of consumer credit.

The poll, commissioned by Compass and Trident Reach from YouGov, found that 68% of respondents thought the government should introduce a lending rate cap to cover all forms of consumer credit, including unsecured credit.

The findings challenge the government’s plans to give regulators new powers to define and ban excessive interest rates on credit and store cards which fall short of a commitment to cap excessive borrowing rates in the unsecured credit sector (payday loans, home credit, pawnbroking and rent to buy).

The poll also found that 7 in 10 want the government to provide support for alternative sources of affordable credit through a Post Bank, Credit Unions and Community Development Finance Initiatives.

Gavin Hayes, General Secretary of Compass, said: “These findings show that the government’s plans for credit reform don’t go far enough. The public feel that just capping excessive credit and store card rates falls short – they want caps on the cost of credit to cover the whole of the unsecured credit sector that causes so much misery for thousands of people in the UK that can least afford it.

“This is a key test of the coalition government’s stated commitment to create a fairer society. Now we need to see if it backs the people or the financiers?”

The Compass and Trident Reach poll follows a new report by Consumer Focus that found the number of people taking out expensive payday loans has quadrupled over the last four years. The report, released last weekend, revealed that the average payday loan was £294 and an estimated two thirds of payday loan borrowers have a household income of less than £25,000. The OFT have estimated that over £16,000 an hour is made in excessive profit by the high-cost lending sector.

For illustrative purposes if you take out a loan of £290 at an interest rate of 1737% with Payday UK and you rolled the loan over for 4 months, you would have to repay £512.76 and the interest incurred would be £222.76.

A broad coalition of citizens groups, campaigners, MPs and celebrities have joined together to campaign to ‘End Legal Loan Sharking’ and is calling on the government to end legal loan sharking by capping the cost of credit and providing alternatives through funding to CDFI’s and a post bank. The coalition will be calling on its growing list of over 40,000 supporters to lobby the Prime Minister to give the power to regulators to set acceptable rates, and ban excessive rates, on all forms of credit. The campaign will also target over a million people on social network sites such as Facebook and Twitter to take action and recently launched a new interactive website: www.endlegaloansharks.org.uk.

For further information contact Gavin Hayes on 07900 195591 or Joe Cox on 07796 884487

Compass is the UK’s most influential political pressure group with over 40,000 members and supporters across the UK. Together we campaign for a more democratic, equal and sustainable society.

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