Katy Clark MP has backed a Charter aimed at ending the ongoing ‘Payday Loan Rip-off’.
The Charter calls for tougher regulation of so-called ‘payday lenders’, companies offering loans that come with very large interest rates - sometimes as high as 4000% - resulting in many people being plunged into substantial debt as repayments are ‘rolled-over’ with additional interest charges applied.
Organisations supporting the Charter include some of the country’s biggest debt-management, consumer and anti-poverty bodies, such as Which?, Citizens Advice, StepChange (debt charity), Church Action on Poverty and the Centre for Responsible Credit.
Over 70 MPs in the UK Parliament have so far backed the Charter demanding an end to the payday loans rip-off. Members of the public can add their support at change.org/paydayloancharter
Katy Clark, MP for North Ayrshire & Arran, said, “I’ve signed the Charter because payday lenders are ripping-off millions of people, trapping them in spirals of debt.
“The Financial Conduct Authority’s proposals for regulation are a step in the right direction, but they don’t go far enough. This is a once in a generation opportunity to get the proper regulation and enforcement of payday lenders that we badly need. If the opportunity is missed, then payday lenders will be able to carry on exploiting people.”
The full text of the Charter to Stop the Payday Loan Rip-off reads:
We believe irresponsible payday lending and other high cost credit is damaging the health and wealth of our country. Payday lenders are exploiting millions of people across the UK, trapping them in spirals of debt, and the problem is getting worse.
Payday lenders are breaking promises they made in their own customer charter. Self-regulation has failed. We call for effective regulation of payday lenders and high cost credit, which is properly enforced, to:
· Stop them giving loans to people who can’t realistically afford to pay them back
· Stop them repeatedly rolling over loans and creating spiralling debt
· Stop hidden or excessive charges
· Stop them raiding borrowers’ bank accounts without their knowledge and leaving them in hardship
· Stop irresponsible advertising and instead provide clear and transparent information
· Require lenders to promote free and independent debt advice, and ensure they co-operate with other services to help people get out of debt.
We also want action to support the growth of credit unions and other forms of more responsible lending; we want banks to increase the availability of credit to people on low and middle incomes: and we want new research on capping the total cost of credit undertaken now.