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Loans & Credit

Simon Read: Let’s get behind debt advice funded by payday lenders

The People’s Champion

The independent Low Commission on the future of advice and legal support has called for the creation of a £100m-a-year fund to pay for local advice services, paid for mainly through a levy on payday lenders.

The proposal comes ahead of a parliamentary debate on 21 January that will consider increasing the funding for debt advice through a Financial Conduct Authority (FCA) levy on the sector.

Paul Blomfield, the MP who introduced legislation to regulate payday lenders and developed the “Charter to Stop the Payday Loan Rip-off”, is in favour of the move.

“It’s absolutely right that payday lenders, who create many of the problems people face, should provide the additional resources that are needed,” he said.

The FCA has proposed forcing payday lenders to signpost borrowers to debt advice when it takes over regulation of the sector in April.

That’s needed, said Mr Blomfield. “Advice centres are already feeling the strain as the sector has been deeply affected by the Government’s cuts to local authority funding, which have disproportionately hit our big cities.”

I agree with his views. What payday lenders do is not illegal – in fact, I accept that at times they can help those people who can afford to use their services. But the lenders should take greater responsibility for their customers, particularly in helping them if they get into financial trouble. Ministers should also support the proposals.