Unite is backing Paul Blomfield’s bill to curb legal loan sharks. The good news is the bill has already had its first reading, but now the hard work starts.
The last 20 years have seen a rapid rise in payday lenders marketing their loans with excessive interest rates to those most in need of emergency funds. As the impact of the cuts continues to hit, research conducted by Unite has uncovered that people struggling to make ends meet are sliding deeper in to debt. And that research has found that every month tens of thousands of people are borrowing the equivalent of a week’s wages.
This isn’t for new cars, holidays or expensive TVs – this is money for transport, childcare, the basics. This is money to put food on the table and keep a roof over their head.
People are borrowing to pay the mortgage or their rent.
Please email your MP here and get them to back Paul Blomfield’s bill to curb legal loan sharks
As wages have stalled the cost of living keeps rising. Wages have stood still since 2002 but food, energy, housing and transport costs continue to rise. Austerity Britain has set ordinary people on a path to poverty.
The human consequences are painful and the payday lenders are exploiting people’s desperation and profiting on the back of poverty.
And Britain’s payday industry is among the least regulated in the world. Payday lenders can charge as much as they want – recently Wonga hiked its interest rate to a savage 5,600 per cent, an astronomical figure in contrast to other countries.
In many states in the US, the amount of interest that a payday lender can charge you is capped at 36%. In the majority of states in Australia it is 48% and in Canada it is 60%, but the UK, being the exception, has no limit to how much a lender can charge.
And what this means for ordinary people is a fast track to debt. And people who struggle to repay loans on time can be hit with extortionate charges and interest rates. One recent example highlights how a £150 loan from a payday lender soared to £15,500 in two years. That’s an increase of 10,000 per cent.
The Office of Fair Trading published a damning report last March that slammed “widespread irresponsible lending” with examples of payday loan form lending at sky-high rates to under-18s, the mentally ill, and people who are drunk. It’s time for a cap on credit – end bad practices by payday lenders.
Please email your MP and get them to back Paul Blomfield’s bill to curb legal loan sharks