Today’s warnings to payday lenders by the Office for Fair Trading (OFT) do not go far enough to stop people being plunged into debt misery this Christmas, warned Britain’s largest union, Unite.
While welcoming the regulator's recognition that debt collecting practices among the UK’s 240 pay day lenders is a cause for concern, Unite reiterated calls for the government to cap payday loan interest rates as a way to stop borrowers drowning in debt. Some lenders have charged up to 16,000 per cent interest on payday loans.
The OFT’s concerns over poor practices in the sector come as it investigates several payday lenders over aggressive debt collection practices. The OFT will publish a full report in the new year, including whether action is needed to tackle problems in the sector.
Len McCluskey, Unite general secretary, said: “The OFT’s warning to payday lenders doesn’t go far enough, quickly enough. Increasingly, ordinary working people are being forced into the clutches of payday vultures just to put food on the table and make ends meet.
“Menacing debt collection practices only compound the misery borrowers feel. With Christmas looming, legal loan sharks will be rubbing their hands in anticipation, readying themselves to cash in on the misery of hard pressed families with interest rates of more than 4,000 per cent.
“For many the new year will usher in a cycle of debt and worry. We need action now to stop the rogue practices of legal loan sharks and a cap on the extortionate interest rates to put a stop to the debt misery.”
For further information contact Alex Flynn, Unite head of media and campaigns, on 020 3371 2066 or 07967 665 869.
Notes to editors:
- Unite is Britain and Ireland’s largest trade union with 1.5 million members working across all sectors of the economy. The general secretary is Len McCluskey.