A private members bill has been proposed by an MP to crack down on lenders who are allegedly breaking their promise to protect vulnerable consumers and treat customers fairly. The bill was proposed by Paul Blomfield, Labour MP for Sheffield Central, after Citizens Advice had found evidence that payday lenders were failing to check whether people can afford to pay back loans, and that they were refusing to freeze interest rates for those struggling to repay.
Chief executive of the Citizens Advice, Gillian Guy, stated that “people who can’t afford to pay back loans are handed one after the other, resulting in many customers drowning in debt as interest rates and charges exacerbate problems.” She goes on to blame celebrity endorsement, cartoon gimmicks and lucratively advertised football sponsorship deals for making the payday loans seem an attractive short term fix, whilst ignoring the ugly truth of the long-term hardship that follows.
This private members bill will help prevent predatory practices by unscrupulous payday lenders, and so protect the consumers who are struggling to pay their debts. Tougher regulation is clearly required and has been promised by the Financial Conduct Authority (FCA) when it takes over regulation of payday lending in April 2014.
The High Cost Credit Bill, as the legislation will be entitled, sets out a number of proposals which will help protect consumers. These include the introduction of lending limits, ensure clearer information is provided to borrowers on the cost of loans and capping excessive charges.
It is important to remember to always read the small print when taking out a payday loan to ensure that you understand fully how much you will have to pay back and when by. Quite often by taking out these loans you will end up in a financially worse position overall. If you are having financial difficulties then please get in touch with Myers Clark now, as we may be able to ease your burden with sound and unbiased financial advice.
Email Paul Shaw, or phone him on 01923 224411 for specialist help and advice.