WHEN: Thursday 11 July, from 10:15
WHERE: Old Palace Yard, Westminster, SW1
MPs and peers will be asked to show their support for Paul Blomfield MP’s High Cost Credit private members’ bill by attending a pop-up payday lenders' shop in parliament tomorrow. Unite, the UK’s biggest union, will be joined at the event by Paul Blomfield MP and a number of other parliamentarians.
The payday lending industry was worth £100 million in 2004, by 2009 that figure had soared to £900 million and has now reached over £2.2 billion. However, legislation governing this form of lending has lagged behind, leaving consumers with limited safeguards.
In other countries governments have taken action to protect consumers, including Australia, where lenders are prohibited from charging 20 per cent of a loan under £1,300 upfront and four per cent a month afterwards. While many provinces in Canada have capped interest rates at 21 per cent or below.
Many ordinary people are becoming increasingly reliant on payday lenders as wages stagnate, prices rise and benefits are cut. Yet the lack of regulation of the payday lending industry is leaving many in danger of being ripped off, with some borrowers facing interest rates of over 11,000 per cent APR. There is also little regulation for advertising, the credit checking systems lack rigour and firms making huge profits do little to support customers with debt advice. Paul Blomfield's bill seeks to address a number of these issues.
The government’s recent plans to delay the time at which people who lose their jobs can claim support by seven days will force even more vulnerable people into the hands of payday lenders.
Speaking ahead of tomorrow’s event, Steve Turner, Unite executive director of policy, said: "The growth in the number and profits of these legal loan sharks is a damming indictment of our economic situation. Ordinary people are being squeezed - as prices rise, wages freeze and the government’s brutal cuts to welfare begin to take hold. This is forcing people into the hands of rip-off lenders.
“Legal loan sharks are sucking money out of our communities at a time when people are suffering. Their business model delivers huge profits for financiers, while leaving ordinary people with out of control debts. Our members have told us that this is a growing problem for them and their communities – so we are determined to work to stamp out this issue and bring loan sharks in to line.
“Even though the use of payday lending has ballooned since the global crash in 2008, legislation protecting people who are increasingly forced to use these services is woeful, leaving them open to exploitation. That is why we are backing Paul’s ‘High Cost Credit bill’. We urgently need to clamp down on reckless misleading advertising, astronomical interest rates, as well as ensuring that these lenders contribute towards debt advice.
“We’re hoping that enough MPs turn up to the second reading debate on Friday 12 July, to ensure the bill continues through parliament in the next term.”
For more information please contact James Bevan on 07711 347 645.
Details of Paul Blomfield's High Cost Credit private members' bill
- Unite is Britain and Ireland’s largest trade union with 1.4 million members working across all sectors of the economy. The general secretary is Len McCluskey.