MPs push for greater controls on payday loans
Andrew Grice has been Political Editor of The Independent since 1998. He was previously Political Editor of The Sunday Times, where he worked for 10 years, and he has been a Westminster-based journalist since 1982. His column, Inside Politics, appears in The Independent each Saturday.
Wednesday 07 March 2012
MPs have demanded a new law to rein in companies offering high-cost, short-term payday loans to stop them exploiting vulnerable people.
In a report published today, the all-party Commons Select Committee on Business warns that tightening the credit industry's codes of practice will not work and urges the Government to consider statutory controls on payday loan and credit management firms. Their inquiry follows campaigns, including one by The Independent, for a crackdown on lenders accused of preying on people such as benefit claimants and then "rolling over" loans they were never likely to pay back, so they pile up huge debts.
The committee called on Tony Hobman, chief executive of the Money Advice Service funded by financial firms, to take a cut in his £350,000-a-year pay and bonus package, which includes a £250,000 salary. "At a time of pay restraint, we do not believe the head of a comparatively small organisation should receive a salary £100,000 in excess of the Prime Minister," says its report. "The perception of such extravagance does not sit easily in an organisation tasked with helping those in debt."
The MPs are "confused" by the Government's claims that face-to-face debt advice would not be reduced even though legal aid for such help is being cut by 75 per cent. They express concern that the decision to remove the Social Fund, which provided emergency loans, could drive people into the arms of loan sharks.
Adrian Bailey, the committee's Labour chairman, said that at a time when growing numbers of people are relying on payday loans and debt management services to make ends meet, the industry remained "opaque and poorly regulated." He criticised the Government for not acting on a consultation exercise that ended almost a year ago, and called for "swift and decisive action to prevent firms abusing the needs of such a vulnerable customer base."
The committee says that credit adverts should no longer show the APR (annual percentage rate) but should make clear the total cost, including interest and fees. "If it cannot be demonstrated that self-regulation can deliver the necessary protections then the Government will need to intervene with statutory regulation," says the report.
Other demands put forward by the MPs include higher licensing fees for higher-risk credit firms and a fast-track procedure for suspending credit licences.
Easter egg hunt horror as mother finds dead body under deck of house
Missing Malaysia Airlines Flight MH370: Wreckage could be found within a week as search reaches 'very critical juncture', says minister
South Korea ferry disaster: Released transcripts show chaos and confusion in the moments before ferry sinks
Unbeliebable: The White House offer 'no comment' to anti-Justin Bieber petition
Loch Ness Monster found on Apple Maps?
The food poverty scandal that shames Britain: Nearly 1m people rely on handouts to eat – and benefit reforms may be to blame
Scottish independence: It is the English who should be on their knees, begging the Scots to vote ‘No’
Nigel Farage fatigue? Half of voters ‘immune’ to Ukip’s appeal
'Sinful': Video of British Muslims dancing to Pharrell Williams's hit Happy comes under attack
Nigel Farage: I’m taking on the status quo, and the Establishment’s fighting back
Refugee facing deportation from Sweden saved by fellow passengers refusing to let plane leave
- 1 Easter egg hunt horror as mother finds dead body under deck of house
- 2 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 3 Unbeliebable: The White House offer 'no comment' to anti-Justin Bieber petition
- 4 Loch Ness Monster found on Apple Maps?
- 5 How We Met: Alison Moyet & Emma Kennedy: 'I knew we'd be friends because she was happy to make a prat of herself'
£130 - £140 per day: Randstad Education Ilford: Secondary Geography Teacher Lo...
£55 - £70 per day: Randstad Education Cheshire: Are you a dynamic and energeti...
Negotiable: Randstad Education Group: SEN TAs, LSAs and Support Workers needed...
£50000 - £60000 per annum: Pro-Recruitment Group: The Sheffield office of this...