Tell the payday lenders they're fired! Lord Sugar blasts the legal loan sharks

[citizenB]

Lord Sugar wades into the PayDay loan trap..

 

 

Payday loan companies and short-term high-interest lenders such as Wonga have, regrettably, become part of our everyday life.

 

Last year I backed the Mirror’s campaign to End Legal Loan Sharking and warned people against the danger of pre-payday cheque-cashing firms in my book, The Way I See It.

 

I wrote: “The interest rates are ridiculous and, again, people get stuck on a treadmill where they have to pay back outrageous amounts of money for a piddling £100-200 advance against their salary.”

 

In recent years it’s estimated that the volume of loans by payday lenders in Britain – from both foreign and home-grown firms – has more than doubled to £1.8billion.

 

Another reason for the surge of payday lenders is not just the demand but also the supply.

 

Tighter regulations in the US have meant that many payday lenders have targeted the UK.

 

Nearly half of states in the US have legislated to make payday lenders less profitable with steps such as capping their interest rates.

 

The American state of Georgia has even banned payday lending under the “cash for cheques” system.

 

Loans of less than $3,000 are covered under the Georgia Industrial Loans Act, which limits smaller loans from individuals or companies to an interest rate of no more than 8%. Loan companies also need a licence to operate in the state.

 

It is clear that companies are having a field day in the UK where they don’t have to abide by tough laws like that – and all of this at the expense of some of the most financially vulnerable people in our country.

 

This is why the amendment to the Finance Bill being put forward today by my fellow Labour peer Lord Parry Mitchell is so important.

 

This Labour amendment aims to give the Finance Conduct Authority (FCA) the power to place a cap on the total cost of any loan if it judges that that loan will cause detriment to the consumer.

 

Giving the FCA the power to set guidelines on the impact of lenders’ behaviour on consumers is essential to protect the public from unfair practices and the never-ending cycle of debt. It introduces a much-needed sense of fairness to the lending process.

 

Read more.. http://www.mirror.co.uk/money/personal-finance/lord-sugar-blasts-legal-loan-1460508