Sefton Central Labour MP Bill Esterson pushes for new powers to

Bill Esterson

Sefton Central Labour MP Bill Esterson pushed for new powers to tackle legal loan sharks in Parliament today.

Bill backed Amendment 40 of the Financial services Bill which will in enable the financial regulator to cap the cost of credit.

At the moment APR for payday lenders can begin at 444% and can escalate to 16,500% or more. And home credit lenders, who make home visits in order to collect repayments for their short-term loans, can charge £82 in interest and collection charges for every £100 lent.

Bill Esterson said it was time the industry was tighter regulated.

Bill said: "Many people are being forced to take out payday loans because of the rocketing price of living and unemployment. 

"It has been predicted that four-million people will take out a payday loan in the next six months alone.Times are hard. These companies should not be allowed to prey on people who need help the most.

"So it is time the government stepped in to help protect consumers here in Sefton Central from these high street loan sharks. Tighter regulations on the interest rates they can charge is the first step.

"We also need to do more to support access to affordable credit through credit unions and help those who get into debt through counselling and debt management services.

"That’s why I am supporting Amendment 40 and a cap on the cost of credit."

The MP said a large number of people who take out payday loans are repeat borrowers and are trapped in a spiral of debt.

Bill said: "Payplan, a debt charity company, says that 47% of its clients had six or more payday loans in the last year alone. This is not a short-term temporary measure; this is a way of life for millions of people in our country nowadays. 

"More than half of the people going to Payplan for debt advice owed more than £500 to these companies, and 61% had more than one at a time. Most crucially, 86% of its clients were using the loans for basics—food, transport and the basic costs of everyday living, not luxuries. 

"People are being trapped in a prison of debt because of the extortionate interest rates these companies are charging. This needs to end now."

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