John backs move to regulate payday loans
John Healey is backing a Bill to regulate rip-off payday money lenders who can charge interest rates of up to 1000 per cent.
The number of people seeking help with payday loan debt more than tripled in the Wentworth and Dearne constituency last year.
Mr Healey said: “These payday lenders are making millions from extortionate loans to some of the most vulnerable people in Rotherham and Barnsley.
“It is understandable that, in hard economic times, people feel they have no choice but to turn to them.
“But unexpected costs quickly mount up, and people are pushed further into debt because of the massive interest rates, rip-off charges and misleading advertising.
“This Bill aims to stop the worst practices which badly exploit those who can afford it least.”
The number of people taking out payday loans and struggling with debt is increasing rapidly.
In 2011, debt charity Step Change had 11 (7% of total) clients in the Wentworth and Dearne constituency with payday loans. In 2012, the number had gone up to 39 (20%).
The charity saw 68 people from Wentworth and Dearne with debt problems in 2005 but this had nearly tripled to 198 by 2012.
The average unsecured debt in the constituency last year was nearly £13,000 and the amount owed to payday lenders £1,295.
The Office of Fair Trading say the value of the payday loan market was £2 billion in 2011/12, up from £900 million in 2008/09. Complaints are multiplying and most are resolved in favour of the consumer.
The High Cost Credit Bill, put forward by Sheffield Central Labour MP Paul Blomfield, has cross-party support.
It will include:
• Provisions to control advertising and marketing of high cost credit products and ensure clearer information is provided to borrowers on the cost of loans and additional charges if they fail to repay
• New measures to ensure loans are affordable by introducing lending limits and capping excessive charges
• Protection for borrowers having problems with repayment by requiring lenders to refer them to free independent debt advice, freeze charges and ensure that proper repayment plans are put in place
Earlier this year, Labour leader Ed Miliband pledged to help protect communities from payday lenders by promising councils and local people the power to choose the shops they want on their high street.
The Bill will receive its Second Reading on 12 July. Mr Healey would like to hear from people who have been affected by payday money lenders – phone 01709 875943.