Thursday, 27 October 2011

Why Haslingden & Hyndburn people should sign the petition to end legal loan sharking

Many Haslingden and Hyndburn residents will have noticed an alarming increase in the number of payday lenders on our streets. These high-cost credit providers are taking advantage of recent economic woes by offering short-term loans to people desperate for cash to make ends meet. And as Christmas approaches, with all the financial pressures the season brings, these lenders are set for a bumper haul at the expense of vulnerable consumers. There is no legal limit to the amount they can charge, and as a result residents in Haslingden and Hyndburn regularly come to me in dire financial straits as a result of taking out loans with payday lenders and other similar high-cost credit providers.

In other European countries, consumers enjoy protection from exploitation by the high-cost credit industry, but in Britain Government has consistently delayed taking action. That’s why I am supporting a new petition calling on the Government to introduce a range of caps on the total cost of credit that can be charged by these lenders.

Nationally the high-cost credit sector has been enjoying a protracted boom - In 2009, the payday lending industry was worth over £1.2bn, more than three and a half times larger than in 2006, and figures for 2010 obtained by freedom of information from BIS show that this figure has now risen to £1.9bn. Between April and May this year there was a 58% rise in people applying for a payday loan via moneysupermarket.com.

Meanwhile the numbers of people getting into severe financial difficulty as a result of taking out high-cost credit have been growing at an astonishing rate. Citizens Advice report that there has been a fourfold increase since 2009 in the numbers of people coming to them with debt problems after taking out payday loans. In addition the Debt Advice Foundation has shown that 41% of those struggling with debt claim their financial problems are the result of high-interest or payday lending.

One in four people who take out a payday loan need the money to buy food or essentials for their household, with 44% using them to pay off other debts.

It’s essential that the Government gets a grip on this industry before the pressures of Christmas force thousands more consumers in Haslingden and Hyndburn and around the country into the hands of these legal loan sharks.

That’s why I’m urging Haslingden and Hyndburn residents to sign the petition calling on the Government to introduce caps on the cost of credit. If enough people sign it, we can end legal loan sharking once and for all. You can find the petition here: http://epetitions.direct.gov.uk/petitions/20219.