Campaign against Pay Day Lenders
Action against pay day lenders
The growing desperation of families struggling to cope in the current economic climate and suffering from the government programme of cuts to benefits is leading to an explosion of firms and shops offering payday loans or pawnbroking services. The rates of interest charged by these companies is very high. As an example the Wonga web site states that the representative APR for its loans is 4214%. To borrow £100 for one week costs £12.78 and for 4 weeks costs £34.64.
The Labour MP for Walthamstow, Stella Creasy has called for the rates of interest charged by pay day loan companies to be capped in order to protect those who are vulnerable to getting into debt that they cannot control or repay. Her web site at http://www.workingforwalthamstow.org.uk/ gives a very detailed background on the issue.
Stella suggests that pressure should be put on the new Financial Conduct Authority and asks those who support her view to write to the Financial Services Authority Acting Chief Operating Officer, Lesley Titcomb calling for urgent action. In April 2014, the Financial Conduct Authority will acquire the power to control interest rates charged for consumer credit.
The suggested text for a letter shown below and it can be emailed to email@example.com or, alternatively, you can send it to Fabian Hamilton c/o 335 Roundhay Road, Leeds LS8 4HT and it will be forwarded on your behalf.
Your name and address
To: Lesley Titcombe
Acting Chief Operating Officer
Financial Services Officer
Dear Ms Titcombe
I'm writing to you as a resident of the UK to ask you to listen to the case for providing British consumers with the protection from toxic credit other consumers around the world enjoy by capping the costs of credit.
I was delighted that last year Parliament approved, in principle, powers for the new Financial Conduct Authority to cap the costs of credit- and deeply disappointed to hear the Government speak out against this measure this year. Millions are already struggling financially due to the rising cost of living, unemployment or wage freezes. Without action to ensure the cost of credit is affordable, we could see millions more Britons getting into financial difficulties as a result of borrowing from these legal loan sharks.
The Office of Fair Trading report shows just how out of control these firms are and the need for the Competition Commission to investigate this whole industry. Actions on credit checking and advertising rules will help to limit this damage, but the best way to prevent these problems is to introduce caps on the total costs of credit so that families are not pushed into debt when borrowing in this way in the first place. To help understand how best to tackle these problems I urge you to commit to undertaking your own urgent research into total cost caps and how they work in other nations such as Japan, America and Australia and pledge to take action as soon as your role supervising consumer credit comes into force in April 2014.
I would welcome confirmation from you that you will support these measures.