Labour MP for Sefton Central, Bill Esterson, has signed a charter to stop payday loan rip-offs.
Bill attended the launch in parliament of a campaign by Which, CAB, Church Action on Poverty, Step Change, and Centre for Responsible Credit to launch the charter.
The MP also joined with fellow Labour MPs in calling for steps to stop payday loan companies, otherwise known as legal loan sharks from setting up in high streets across the country.
The charter was launched by Bill’s Labour colleague, Paul Blomfield MP and had support from MPs from all parties and Sefton Central constituents can sign up to the charter at change.org/paydayloancharter
Bill said: "I have seen a sharp rise in the number of people turning to payday loan companies. Many people end up racking up huge debts which they have no chance of repaying and the levels of interest are astronomical.
"The charter to stop the rip off by payday loan companies is an important step in supporting people who all too easily end up owing far more than they borrowed.
"With the cost of living crisis which we have seen, with the fall in living standards of £1,500 since the Tory-Lib Dem government came to power in 2010, there has been a massive increase in the number of people in financial difficulties.
"What we need is support for people who are in trouble, support in managing their debts, not a quick fix with a rip off loan from a legal loan shark. That’s why this charter is such a good idea.
"I would also advocate much greater use of credit unions who charge tiny levels of interest. That’s why I have been working with Knowsley Mutual who want to expand into Maghull, Lydiate and other parts of Sefton.
"Credit Unions are a very important way of supporting people in financial difficulties as are debt counsellors.
"It was disappointing that the government failed to support Labour’s motion in parliament this week where we called for payday loan companies to be denied the easy access to high streets which the Tories and Lib Dems have granted them through changes in the planning system. We should be learning from the lessons of what happens if people borrow money they cannot afford to repay, after all that is what caused the financial crisis.
"Getting people into debt by making legal loan sharks readily available in our high streets is not the answer yet that is what the Tories and Lib Dems have done by opposing Labour’s call for a clampdown on payday loan companies having easy access to shops on the high street.
"The payday lending charter supported by Which, Step Change, Citizens Advice Bureau, Church Action on Poverty and Centre for Responsible Credit is exactly the right way forward and I fully support the charter.
"It is a pity that the Tories and Lib Dems in government have undermined the effectiveness of the charter by relaxing the planning laws to let legal loan sharks set up even more shops on our high streets."
The charter at www.change.org/paydayloancharter says:
We believe irresponsible payday lending and other high cost credit is damaging the health and wealth of our country. Payday lenders are exploiting millions of people across the UK, trapping them in spirals of debt, and the problem is getting worse.
Payday lenders are breaking promises they made in their own customer charter. Self-regulation has failed. We call for effective regulation of payday lenders and high cost credit, which is properly enforced, to:
• Stop them giving loans to people who can’t realistically afford to pay them back
• Stop them repeatedly rolling over loans and creating spiralling debt
• Stop hidden or excessive charges
• Stop them raiding borrowers’ bank accounts without their knowledge and leaving them in hardship
• Stop irresponsible advertising and instead provide clear and transparent information
• Require lenders to promote free and independent debt advice, and ensure they co-operate with other services to help people get out of debt.
We also want action to support the growth of credit unions and other forms of more responsible lending; we want banks to increase the availability of credit to people on low and middle incomes; and we want new research on capping the total cost of credit undertaken now.