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As the economy stagnates and wages don’t stretch as far as they did previously, many people are turning to the payday loan industry. There is no doubt that there is a market for these services but we have heard too often recently of people using them simply to pay household bills. Recently, a report from the Office for Fair
Trading highlighted more deficiencies in the payday loan sector. It is becoming clear that the sector is out of control and the Government has failed to properly regulate it to protect some of the most vulnerable people in our communities. A robust regulatory regime could resolve
the initial concerns highlighted by the OFT by providing a framework to restrict the amount borrowed, the number of loans, the overall cost of the borrowing, the measures for affordability checking, the procedures for passporting customers to debt management agencies and the duty of care for payday loan customers. The UK market is flooded as payday loan companies have come from the US following a regulatory regime being put in place there. We must protect vulnerable customers and people who get into a spiral of debt I was delighted that last the week, the
Labour amendment to the Financial Services Bill in the House of Lords. The amendment looks to give new Financial Conduct Authority clear powers to tackle the overall cost and duration of these high- cost loans where they cause consumer detriment. My colleague in the Scottish Parliament,
Kezia Dugdale MSP, has also received a high volume of casework from people regarding the rapid boom of so called “Pay Day” loan companies, and she has been running a “Debtbusters” campaign to highlight the problems and to make sure people have access to financial advice. Click here for information on where to go for debt advice -
advice)
www.keziadugdale.com/debtbusters/debt- Whilst the regulation of pay day loan
lenders is an issue reserved to the UK Parliament, the issue of debt is very much an issue which the Scottish Parliament can act upon. Part of the action she is taking involves seeking to change the law so that the Scottish Government provides more support to families in high levels of debt, struggling to get by. My Labour and Coop colleague, Stella Creasy MP, has also been leading a campaign to better regulate PayDay Loan lenders in Westminster and you can keep up with her campaign
here Government confirmed that it will consider a
www.keziadugdale.com/debtbusters -
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