Stella Creasey, Labour MP for
Walthamstow, is a leading supporter of the Sharkstoppers campaign against the
payday loan industry. The new Financial Conduct Authority will have ability to
cap the costs of credit, but not until April 2014.
In this article she
argues that, in the meantime, much more needs to be done by the OFT to limit the
damage and misery caused by these companies and asks for your
"In 2013 average household energy bills are
expected to reach an all-time high of £1300. A third of us are experiencing a
second successive freeze in wages and the cost of food and travel continues to
Little wonder it was reported four million of us intended to take
out a payday loan just to cover the cost of Christmas.
country companies offering loans with interest rates of 4,000% or more are now
operating in every community, lending on every high street and online.
With one in three of these loans being used to pay off another payday
loan, all too often this form of credit creates a spiral of debt.
end up borrowing more to pay off their original debt and still can’t make ends
Research shows half of all borrowers who have taken out a payday
loan have taken out credit that it turned out they just couldn’t repay and 57%
have missed a payment, so incurring further charges they can’t
Despite the problems they cause, surveys show five million
Britons expect to have to use such credit to cover their everyday living costs
With further cuts due to tax credits, the numbers relying on
this toxic form of finance could rise beyond this peak; research shows ten
million Britons feel financially precarious.
For two years Sharkstoppers
campaigners have been calling for the Government to learn from other countries.
Most nations have tackled the problems these firms cause by capping the costs of
credit, so limiting the debts that consumers can get into when borrowing in this
Yet until recently the British Government resisted taking action,
instead relying on these companies themselves to stick to their own voluntary
codes of conduct. A recent report by the Office of Fair Trading delivered a
damning indictment of this, showing how badly these firms treat British
The National Audit Office’s own work showed the failure to
address the problems credit market cost UK consumers £450m last
Thanks to the Sharkstoppers campaign the Government has finally
agreed to give the new Financial Conduct Authority the power to limit the prices
consumer credit companies can charge. However, this power won’t come into force
Without action now, and with the rising costs households
will face, 2013 could be a window of opportunity for these so called legal loan
To prevent this Sharkstoppers is now calling on the OFT to
strengthen the ‘irresponsible lending guidance' for these firms in 2013.
The guidelines the OFT brings in can set the standards for the new FCA
and send the industry a clear message about what they can do in the UK.
Sharkstoppers wants this code to cover a number of issues, starting with
setting out what it considers an irresponsible price of credit and so the cap
that there should be on its cost.
The problems with this lending are not
only caused by the high costs associated with it.
Some borrowers can end
up taking out multiple loans, and many lenders make a virtue of the speed and
limits of their credit checks. To make lenders responsible for the amount they
offer and the consequences of borrowing, the OFT should require all lenders to
report all loans made to a real time credit register at the very moment they
provide the loan.
So too, the OFT should demand a reform in the way
lenders use continuous payment authorities (CPAs) to address the concerns about
fraud and debt this form of payment has created.
You can find out how you
can help this campaign, along with a sample letter to send to your MP about the
role of the OFT at:www.workingforwalthamstow.org.uk. The
success of Sharkstoppers so far shows we can make a difference against this well
funded industry when we work together, as reports and research continue to show
these companies targeting vulnerable consumers in Britain.
We must be
vigilant in keeping up the fight to end legal loan sharking in
If you want more
help, advice or even just some moral support then come to The
Consumer Action Group website where we offer help on pretty well every
consumer problem COMPLETELY FREE. As readers will know, I am not a supporter of Labour or many of their ludicrous ideas, but this one has my one hundred percent backing. If readers have read the GAZJET LATEST and followed some of the moronic comments, then this sensible contribution to daily matters is heartily welcomed. Now back to Blackpool. One matter that came across my desk was a disabled resident of skint Blackpool who the local Occupational Therapist reckoned was not in need of a stairlift even though the 70 year old had recently had two strokes and is temporarily confined to hospital care; when other agencies offered to install and pay for the upkeep of such a necessary aid, Blackpool Council dragged their feet and obstructed a charity from assisting, because they are the landlord. There is much more to this sad tale but they cannot be explored because it will identify the injured party.
Bloody mindedness does not come into it. Come on Cllr Blackburn. You make much of your socialist ideals. How about helping the old and disabled without making a political song and dance over it? Just be a Human Being for once and stop YOUR council from being so awkward and cruel .