Islwyn MP Chris Evans has called for doorstep loans with high interest to be made illegal.
The Labour politician wants to see the introduction of affordable credit to ensure people don’t get tied into loans they cannot afford to pay off.
Mr Evans outlined his argument at the Co-op Party ‘Fairer Finance for All’ fringe event at the recent Welsh Labour Party Conference held in Llandudno.
Unlike many other EU countries, the UK does not guarantee people legal access to
affordable credit. Lenders can refuse to lend to anyone, for any reason, and they can charge
any price for their lending. They can, and do, impose interest rates at percentage rates in the
thousands.
The MP said that nine million people in the UK do not have access to credit from banks, so have no choice but to use high interest lenders. The cost of a loan of £100 with a company such as Provident
Financial can be £49.50 – nearly 50% of the amount borrowed, or an APR of 545.2%.
He said: “The booming industry of doorstep operators and payday lenders is making millions from society’s most vulnerable families through high-cost credit.
“To me, extortionate rates of interest are simply disgraceful, and we should not allow such
unscrupulous companies to take advantage of the vulnerability of some of the poorest in our
society that is why the introduction of a cap on APR is now vitally important.”