Margaret Burgess MSP, a former manager with Citzens Advice Bureau Scotland, has given what she described as “a guarded welcome” to additional protection for payday loan borrowers. However, the SNP MSP also believes UK Government proposals may be “too little, too late” and has urged Westminster to take stronger action on the industry.
Payday loan companies have agreed to new pledges that will see charges and interest frozen for borrowers in difficulty no later than 60 days after they stop making payments, but Mrs Burgess said, “Any additional protection for borrowers is always welcome but we need stronger action to address the serious issues underlying the industry – we all know these companies are targeting the vulnerable and low paid.”
Describing such behaviour as “simply unacceptable”, Mrs Burgess called for “real regulation of the payday loan industry.”
A Europe-wide survey last year laid bare the shameful face of payday loans, with 38 out of 47 UK credit websites failing to comply with EU consumer law: the Office of Fair Trading has declined to name the companies.
Margaret Burgess said, “The UK Government needs to act properly now to protect the most vulnerable in our society. We should not tolerate the continuation of a culture that allows companies to charge rates of interest often eclipsing 4000 per cent APR.
“Westminster needs to see that, as a result of the current economic climate, more and more people resort to taking on payday loans and then find themselves pushed further into debt, getting lost in a system that offers little protection.”
The MSP for Cunninghame South, which includes Stevenston, concluded, “We need good access to financial advice and to credit that is affordable, and we need it now.”