Press release: Sheila Gilmore MP backs action on Payday Lenders

Edinburgh East MP Sheila Gilmore has backed a charter to better regulate payday lenders and welcomed Ed Miliband’s pledge to boost low-cost alternatives like credit unions.

MPs from all parties and campaigners are urging the Financial Conduct Authority to back the Charter to Stop the Payday Loan Rip-off and introduce tougher regulation of payday lenders to stop millions of people being ripped-off. Over 40 MPs and peers backed the Charter at its launch in Parliament on Tuesday 15th October and members of the public can back the Charter at change.org/paydayloancharter.

 

Sheila Gilmore Payday Loan Rip-off

This comes at the same time as Ed Miliband has announced that the next Labour Government will raise millions of pounds through a levy on the profits of payday lenders – money which will be used to double the public funds available for low cost alternatives such as credit unions.

Sheila Gilmore’s local Capital Credit Union has announced it will offer a same day short term loan with a representative APR of 26.8%. This compared favourably to the 5853% charged by Wonga.

Sheila Gilmore MP said:

I’ve signed the Charter to Stop the Payday Loan Rip-off 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. I’d encourage people to add their voice to the growing calls for tougher regulation of payday lenders by signing the Charter at change.org/paydayloancharter.

I also warmly welcome Ed Miliband’s pledge to boost credit unions. In Edinburgh the local Capital Credit Union has agreed to offer a same day short term loan with a representative APR of just 26.8%, which compares to the 5853% charged by Wonga. This will really help local families in the run-up to Christmas.

Notes for Editors

  • 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.

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