MP Lisa Calls for end to legal loan sharking
As banks reveal vast profits 100 leading figures call for caps on the cost of credit Broad coalition calls on government to end ‘legal loan sharking’
Today a broad coalition of citizens groups, campaigners, MPs and celebrities have called on the government to end legal loan sharking. Currently lenders can charge any price for credit which means some loan and credit companies charge £82 for every £100 lent. Annual interest rate charges of over 2500% are also now common (despite the Bank of England base rate being just 0.5%). Borrowing at these rates repeatedly tips customers into inescapable cycles of debt and poverty. According to the OFT £16,000 of excess profit is made every hour in this sector.These calls come in the same week that banks reveal vast profits. The campaigners have highlighted that a low Bank of England base rate has not meant cheap credit for customers and further steps must be taken to ensure citizens have access to low cost, short term, affordable credit.
Co-ordinated by the Compass pressure group, this new campaign coalition have called on the government to ban excessive prices for credit and provide alternative sources of credit through CDFIs, credit unions and a post bank. The government has pledged to clampdown on interest rates for credit and store cards and the campaign believes it should do the same for the high cost credit market.Thousands of people across Britain are expected to sign an online petition on a brand new interactive website at http://www.endleagalloansharks.org.uk/. The campaign will be targeting millions of people across Britain through using social networking sites such as Twitter and Facebook.
Gavin Hayes, General Secretary of Compass said: “As banks reveal huge profits it is clear that the whole financial system is working for a very few institutions and not the vast majority of us. As we pack our flexible friends to take away on holiday it is now becoming clear that more and more of us are also using credit to make ends meet. Yet credit and loan companies are legally allowed to charge whatever they like for borrowing money. Door to door lenders are now charging £83 for every £100 borrowed, whilst some online pay day lenders charge a whopping 3000% APR. This is legal loan sharking, a national scandal which must come to an end. Now is the time for caps on all consumer credit and real affordable alternatives through a post bank.”
Neil Jameson, Executive Director of Citizens UK said: “Citizens UK have spent most of 2009 in conversation with thousands of members who confirmed the need for money to be controlled and for the reintroduction of anti-usury legislation as a reasonable response from civil society in light of the economic crisis. This proposal was lodged with all political parties before the election and whilst we’re glad the coalition has agreed to cap store cards and agree to a review of credit and interest rates, Citizens UK is delighted to add our weight and mandate to continue to lobby for a cap on commercial lending”.
Lisa Nandy, Labour MP for Wigan said: “The government has committed to curb excessive rates on store and credit cards but not high cost credit. This means the 3 million people who use high cost credit will have no defence against their excessive profiteering. We need to ask, is the government looking out for the middle classes and ignoring the needs of the poorest borrowers?”
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