Member News
The government has been urged to crack down on "legal loan sharks" that offer short-term credit at staggering interest rates.
Labour's Stella Creasy (Walthamstow) introduced a ten minute rule bill aiming to clamp down on legal loan sharks and ensure everyone has access to fair and affordable credit.
She told MPs: "Loan sharks are now circling Britain's poorest families watching them struggle financially and sensing a business opportunity."
The Walthamstow MP said the coalition's spending plans announced in the Budget and comprehensive spending review had increased the share prices of credit providers.
"The chief executive of one of them has said that as a consequence of the spending review he expects to see a growth in his target market.
"Indeed, following October 20 his share price has already risen 5 per cent, dependent as it is on unemployment and poverty.
"These are companies that offer loans to those for whom credit cards and banks are out of reach, mainly women, the low paid and those with poor credit history."
She added: "These are companies that make money by locking people into cycles of debt, with interest rates starting at around 272 per cent and rising up to 2,500 per cent or more."
The Consumer Credit (Regulation and Advice) Bill would limit the amount lenders can charge and place a cap on late payment fees and default charges.
It also seeks to improve access to credit by integrating credit unions with the Post Office network and conferring greater powers on councils to veto licences for high-street credit agencies.
Creasy told MPs: "If the government is intent on pushing its Budget on Britain it will raise the number of families living with the daily misery of debt in our communities.
"It must therefore take responsibility for its actions. It must give the same consideration for the needs of those for whom the 'never never' is a fact of life as it does for those with an Amex card or a trust fund."
She called on the House to support the bill and help stop legal loan sharks that now "circle our local communities sensing blood".
The bill was given an unopposed first reading but stands little chance of becoming law without government support.
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