Frank Field MP
Your MP for Birkenhead
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We must act to curb payday loans

13
Jun
Wirral Citizen’s Bureau has rightly called for major restrictions on payday lenders.

With this unprecedented squeeze on living standards, I am not surprised that many of my constituents have had to borrow.  It's the interest and other charges that are crucial.

The Office of Fair Trading has investigated but MPs have seen this as a half-hearted effort to curb even the worst abuses.  But we need to stop the blame game and take action.

There is of course the central issue of the rate of interest charged.  The most unscrupulous loan sharks
are trapping borrowers with annual interest rates of more than 1,000 percent.
 
Rates escalate as soon as an individual falls behind with their repayments. But there is worse to come.
   
Customers can face crippling administration fees – on top of the interest charge. 
  
Then comes insurance.  £300 on a £1000 loan is just one example.  There can then follow a charge for a pin and sometimes even solicitors’ fees.
 
Labour is committed to act if we win the next election. Labour's leader, Ed Miliband, has pledged to give local authorities the power to refuse access to payday lenders wishing to move into local high streets.
 
But further action is needed. There are clear difficulties in setting maximum interest rates, although a future Labour government should try.
 
Better still would be the building up of credit unions that can keep interest rates down to a level that enables the borrower also to repay capital on time.
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