Parliament is set to vote on the issue of high-cost credit on Tuesday. These are the payday loans which have staggering APRs approaching 2,000 per cent. On the one hand, used carefully, they allow people to borrow £100 or so to help them over a short-term cash crisis.
For people who need money quickly, it can actually be cheaper to borrow using a payday loan than to slip into the red and face the excessive fees and interest charges of high-street banks. On that basis, a one-off tenner or £20 charge for the convenience may seem high, but reasonable enough, considering the alternatives.
But the big worry is that people don't just borrow once: they go back to the payday lender again and again. If they end up paying £20 each time for the privilege, it quickly turns into being a very expensive way to borrow. It's then a small step to falling into a spiral of debt where struggling folk are forced to take out a new expensive short-term loan each month just to make ends meet.
For that reason we need payday lenders to be better regulated, and for caps to be put on the amount they can charge customers. What we must avoid is interest being charged on interest until borrowers are forced to do without essentials just to service their debts.
Labour MP Stella Creasy (above) who is leading the parliamentary fight to introducing caps on the cost of credit, calls payday lenders "legal loan sharks". She wants the Government to intervene in the market to cut down on the numbers of people falling into financial misery after using the services of a payday lender.
It's becoming more crucial as the Coalition Government's ill-thought-through cutbacks begin to bite. More people than ever appear to be turning to short-term credit to survive. In fact, Moneysupermarket last month reported a 58 per cent spike in demand for payday loans.
So let's remind MPs of their responsibility to all of us – their constituents – and hope they vote for the amendment to the Finance Bill. As Stella Creasy says: "We must ensure that our constituents are no longer preyed upon by exploitative lenders seeking to inflate their profit margins at the expense of people's livelihoods."
Talking of helping people with debt worries, the debt co-op Zero-Credit has just released an online videoguide to checking a lender's or debt adviser's licence, to ensure they're not crooks.It's at http://zero-credit.co.uk/tools.html (For £1, you can also join the co-op, which fights for borrowers' rights)
Reforms announced this week to the Air Travel Organisers' Licence (Atol) scheme, which provides refunds and repatriation if a travel firm fails, will extend the protection to about six million more holidays, according to the Department for Transport. That's good news, of course, but the reforms don't go far enough and could miss an opportunity to ensure the scheme offers holidaymakers complete financial protection and security.
Under the proposals, Atol will be extended to cover any sales that involve a flight and other holiday component such as accommodation or car hire. Companies selling Atol-protected holidays will also have to make it clear to customers what their refund and repatriation rights are.
But the system won't apply to airlines who also sell other holiday components or to UK flights.
Airlines that offer car hire or accommodation alongside their flights should be forced to have an Atol licence. The proposals should also cover UK holidays. The Atol system will only be robust and reliable when all air passengers are covered, and know they're covered.