On Thursday February 3rd 2011 MPs will vote on a motion tabled by Stella Creasy MP (Lab, Walthamstow), on whether to introduce caps on lending rates charged for payday loans and other unsecured debt – the Social Liberal Forum supports the motion, as well as the wider campaign to end legal loan sharking run by Compass.
The motion will be voted on a day before Ms. Creasy’s Private Member’s Bill [Consumer Credit (Regulation and Advice) Bill] gets its second reading in the House of Commons, and is worthy of support on several grounds:
- As the Compass campaign highlighted so effectively, “around 3 million people use high cost door to door loans which often charge £83 in interest and collection charges for every £100 borrowed” – equivalent to APRs in the hundreds if not thousands of percent.
- Since the recession the number of vulnerable people relying on such loans to make ends meet has gone up, further highlighting the need to prevent their exploitation by profiteering loan sharks.
- As pointed out by SLF Council member Linda Jack on her blog, the measures called for in the motion, the campaign and indeed the Bill fit well with existing Liberal Democrat policy, which call for caps on interest rates charged by credit and store card providers as well as better regulation of the unsecured debt market.
Thursday’s vote follows the launch of an All-Party Parliamentary Group (APPG) on Financial Education, co-chaired by MPs Justin Tomlinson (Con, Swindon North), Stella Creasy and Duncan Hames (Lib Dem, Chippenham). The cross-party support for the measures outlined in the motion on loan sharks and by the APPG represent real examples of pluralist politics, and we expect that partisan considerations will be put to one side for this initiative. It is crucial that Parliament votes in favour of rate caps to protect the vulnerable from exploitative lending practices, and we look forward to seeing Liberal Democrat MPs offering their support.