Following the collapse of Wonga, high cost credit has been widely criticised, with much of the criticism focused on the high level of annual interest. My colleague Stella Creasy MP has been a vociferous critic of pay day loans.
At Christmas with families budgets increasingly stretched and pressure to buy many people feel that they have no choice but to turn to these types of loans.
Here in Stockport we have a fantastic credit union who are doing a great deal of work to encourage as many people as possible to save with the credit union.
In 2014, the Financial Conduct Authority (FCA) was given responsibility for regulating high-cost credit in the United Kingdom .The FCA has also been given stronger powers to ensure money is not being lent to people who cannot realistically afford to pay the loans back.
I agree that having been given these powers the FCA need to use them.
The FCA has recently published the proposals of its latest high-cost credit review which can be found here. The proposals include new rules on fees from overdrafts.
It is important that people have access to affordable loans. If they don’t they will turn to loan sharks where the interest rate is astronomical and the consequences of non –payment very serious particularly if organised crime is involved.
We need to tackle the underlying reasons that people get into debt and offer help at an earlier stage.