South Central Region have discussed (or is it more appropriate to say disgusted) and passed a motion against Pay Day Loans at our Regional conference in the autumn of 2012. The notion of such loans is valid: provide a small short term loan for those in need to help them through immediate financial hardship. Unfortunately, exploitation is what we get.
Here are some facts about these loans:
• Which estimates over 800,000 UK households have taken out payday loans;
• The Consumer Credit Counselling Service says over 2,000 of their clients in 2012 have had five or more payday loans, compared to 716 for 2009;
• Some payday lenders are charging APR of over 4,000%;
• A charity that helps such lenders said the number of people seeking help with payday loan debts soared from 6,491 in 2009 to 17,414 in 2011 and in 2012 this had exceeded 22,000;
• Citizens Advice Bureau says that the checks to ensure borrowers can pay back their loans, are only carried out about 35% of the time; This is a pretty desperate situation.
I am not advocating banning of these companies (as they have in some states in America) but I do advocate that we should restrict the maximum APR that they charge. In our motion we advocated an upper limit of 50% APR and to limit loan providers from using extra charges for late payment or administrative costs to recover the income lost from these extortionate rates.
People on low pay should not be vulnerable to these legalised loan sharks. As a party that works to emancipate society from unfair conditions, prejudices and strives to ensure a fair and level playing field for all, we cannot fail those who are suffering disproportionately under the current economic climate and are clearly fodder for these objectionable companies who in reality are making life more difficult for them.
Cllr Tahir Maher Vice-Chair – South Central Region