MP to make payday lending stand
The member of parliament for Sheffield Central said his call is a response to the failure of government and the shortfall of the regulator to really take issue with the payday lending industry.
Jo Swinson MP, the consumer affairs minister, admits there is something wrong with a system that allows lenders to trap people into spirals of debt.
Equally the FCA, which will take over regulating the payday lending industry in April 2014, said it would be a ‘regulator with teeth’. However Blomfield said the city watchdog’s consumer credit rules are severely lacking.
Blomfield’s work alongside noted charities such as StepChange and Citizens Advice aims to achieve a popular public response that urges the regulator to make good on earlier commitments to rigour.
His Charter to Stop the Payday Loan Rip-off will set out a number of recommendations to ensure the payday loan sector is treating borrowers fairly.
The Charter calls on lenders to provide at least three working days warning before withdrawing money from customer’s accounts and the complete end to dangerous rollovers.
Carl Packman, author of Loan Sharks: The Rise and Rise of Payday Lending, said: “Paul Blomfield’s charter is a great way to show the government and the regulator that there is wide public support for a more rigour in the regulation of the payday lending industry.
“It’s just a pity that Paul has had to do it. His bill earlier in the year was an absolutely golden opportunity for the government to show they are really committed to tackling rip off lenders – but for political reasons let the bill fail.
“In addition to Paul’s demands of the regulator I would suggest payday lenders act straight away themselves.
“Not everyone who walks through their doors are suited to such an expensive credit product. If they were responsible lenders they would signpost ethical and cheaper alternatives like credit union loans to those looking to borrow money”