I've supported the campaign to put an end to legal loan sharking - where door step lenders give small cash loans at rates of interest in the hundreds and sometimes thousands of percent calculated in apr terms - for a long time.
It's good to note in that case that on 3 February, the House of Commons will vote on whether to support the introduction of a series of caps on the amount that payday and home credit lenders can charge for credit.
The motion has gained widespread cross-party support from MPs who recognise that the Government has a duty to intervene in the high-cost credit market, which is uncompetitive and often exploitative.
If enough MPs turn up on 3 February and vote for the motion, it will send a clear message to the Government that they need to act. You can take action ti support this. Pleas do so by clicking here and help stop this shady end of the banking world.
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Long overdue. Firms like wonga! as simply legal exploitation.
Have they indicated what those caps might be?
I have a credit card – a mainstream one from one of the US-based companies – where they were proposing to charge me 34% APR on ordinary borrowing (not cash advances). I cleared the balance, pronto.
@James
Caps should, I think, be below 60%
Yes, that’s still enormous
But – rates of 180% up to 2,500% are common now
Back in 2003 Richard wrote an excellent “analysis of Provident Financial & the case for an interest rate ceiling”. See http://www.church-poverty.org.uk/actnow/debt/Analysis%20of%20Provincial%20Financial.pdf/view
More recently the “Doorstep Robbery” report explained in great detail why we need a cap on the total cost of credit and how this legislation can work: http://www.neweconomics.org/publications/doorstep-robbery.
Many MPs clearly recognise that this is a big issue, because the motion is in the top five most popular, with over 200 MPs in support of it: http://edmi.parliament.uk/EDMi/EDMDetails.aspx?EDMID=41619.
It just takes 2 minutes to contact your MP using this special webpage: http://action.church-poverty.org.uk/ea-campaign/clientcampaign.do?ea.client.id=128&ea.campaign.id=9281
Richard,
I am surprised that in your article you fail to make any distinction between APR and Total Cost of Credit.
A friend of mine regularly uses Home Credit, borrowing £100 and paying back £140 over 14 Weeks. The APR on her agreement is over 1,000%
In the above, if the £40 is divided by the weeks it gives the lender £2.85 gross profit per visit. I don’t think I’d go door-knocking for that, particularly as she says her collector is on 10% commission on money collected.
She also says if she has to miss a week, it doesn’t go against her. I wish my bank took that attitude, as over the Christmas period, I made a mistake and didn’t account for the bank holidays and for being £70 in the red for two days I was charged £30 for unauthorised overdraft and they bounced my mortgage DD which cost me another £35, plus my mortgage company then charged me £40 for a failed payment. Total of over £100. That is what I call legal loan sharking
@David Abbott
I am quite sure this is a paid for comment from the industry
How sad
And candidly – how utterly inappropriate
@Richard Murphy
You are wrong here – I’m just an individual with a day job who also owns a few properties. I do have the trait of being fairly opinionated though – and who particularly likes lambasting banks who (with the Governments blessing) has fleeced us all and will continue to do so.
However I do appreciate that although my post was moderated, you did not seek to delete although it did have some measure of criticism of you in the first paragraph.
Back in 2003 you wrote an excellent “analysis of Provident Financial & the case for an interest rate ceiling”. See http://www.church-poverty.org.uk/actnow/debt/Analysis%20of%20Provincial%20Financial.pdf/view
More recently the “Doorstep Robbery” report explained in great detail why we need a cap on the total cost of credit and how this legislation can work: http://www.neweconomics.org/publications/doorstep-robbery.
Many MPs clearly recognise that this is a big issue, because the motion is in the top five most popular, with over 200 MPs in support of it: http://edmi.parliament.uk/EDMi/EDMDetails.aspx?EDMID=41619.
It just takes 2 minutes to contact your MP using this special webpage: http://action.church-poverty.org.uk/ea-campaign/clientcampaign.do?ea.client.id=128&ea.campaign.id=9281
@Alan
I did not realise that was still on the web
I think that was the first time these rates of interest were proven
I’m always pleased to have played a small part in this campaign against the hideous abuse of this industry