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107 MPs Call for Lending Interest Rate Caps to Rein in Legal Loan Sharks

Politics / Debt & Loans Sep 20, 2010 - 09:11 AM GMT

By: Submissions

Politics

Landmark gives fresh impetus to the campaign ahead of meeting at Number 10

The 'End Legal Loan Sharking' campaign has received the backing of over 100 MPs ahead of a meeting with Number 10 next week. EDM 660,a parliamentary motion calling for a cap on the cost of credit has now been signed by 107 MPs. MPs from the Conservative Party, Labour Party, Liberal Democrat Party, Democratic Unionist Party, Plaid Cymru, Scottish National Party and Social Democratic and Labour Party are all supporting the EDM.


The campaigners will be meeting with government advisers this week to ask why the government has pledged to give regulators new powers to define and ban excessive interest rates on credit and store cards but is not tackling the much more pernicious high cost credit sector.

Motions to cap the cost of credit are also expected to carry at both Liberal Democrat and Labour Party conference later this month.

Gavin Hayes, General Secretary of Compass said:

"A cap on the cost of credit is supported by 7 in 10 people and it now also has support from all sides of the House - it is clearly an idea whose time has come. Were confident that the government will do the right thing and protect our most vulnerable citizens "

Lisa Nandy, Labour MP for Wigan (who tabled the motion) said:

"This is the first major test of the coalition Government's commitment to protecting the vulnerable from immoral and excessive profiteering. The strength of feeling in the Commons and amongst the public is clear - action is long overdue. I urge Ministers to act now to cap excessive lending rates."

Helen Goodman, Labour MP for Bishop Auckland (who signed the Early Day Motion 660) said:

"The coalition government must urgently take steps to give the same protection to vulnerable customers that is offered to others. Loan sharks are a scourge that exploit those on low incomes in desperate situations. We should follow other European countries and introduce interest rate caps now. "

Stephen Gilbert Liberal Democrat MP for St Austell & Newquay (who signed Early Day Motion 660) said:

"Too often we see the powerful exploiting the vulnerable and creating a cycle of dependency that traps poorer people into paying well over the odds for credit facilities. This needs to end. We need to do more to enable vulnerable people to access credit at sustainable rates."

The End Legal Loan sharking campaign is demanding a cap on the cost of credit because:

The mainstream credit market has contracted since the credit crunch and recession leading to a 1930s style credit crisis
The payday loan and pawnbroker business is now worth £2 billion per year, money which is being extracted from our poorest communities
The UK's poorest borrowers pay the highest price for credit in Europe.
The government has pledged to give regulators new powers to define and ban excessive interest rates on credit and store cards, but is not tackling the much more pernicious high cost credit sector.

EDM 660 reads: "That this house believes that the government should end 'legal loan sharking' by capping the cost of credit for the whole sector (not just for credit and store cards) and provide alternative affordable sources of credit through the Post Office network, local credit unions, CDFIs, co-operatives and mutuals; acknowledges that the UK's poorest borrowers pay the highest price for credit in Europe; further acknowledges that to £16,000 of excess profit is made every hour from the sector and that this is extracting wealth from the poorest communities; is concerned that that the OFT's recommendations including industry codes of practice and financial education - won't work, and certainly won't work quickly to reduce prices for consumers."

The campaign is also running online; thousands of people have signed a petition and emailed Prime Minister David Cameron demanding he take action. The interactive website is available at www.endlegalloansharks.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.

© 2010 Copyright  Compass - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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