The Government is set to agree to change the law to give the new Financial Conduct Authority powers to set a cap on the exorbitant interest rates charged by payday lenders.
The Financial Services Bill will enter its final stages in the House of Commons on Monday, and will include Lords’ amendments made last week to curb the worst practices of rogue lenders.
But the National Union of Students warned this week that a further crackdown is necessary as its evidence shows that unscrupulous lenders are targeting its hard-up members.
Though research shows only 6 per cent of those at university take out payday loans, the NUS study revealed that vulnerable students with children are easier prey for payday lenders, with one in 10 admitting to resorting to using a payday or doorstep loan.
A quick Google search reveals five firms targeting students. One even misleadingly suggests most students will be turned down for university hardship loans to push its high-cost credit charged at 1,355 per cent APR.
“Our research shows that students aren’t clear what financial support is available so this could put many off ever asking about hardship funds,” the NUS said.
Pete Mercer, NUS vice-president for welfare, said: “It’s immoral for payday lenders to target students – they’re an especially vulnerable group because of their low levels of income. If students are in need of financial support, they should contact their university and apply for a hardship fund.”