Tuesday, 3 August 2010

We need an end to 'legal' loan sharking

Today a broad coalition of citizens groups, campaigners, celebrities and myself have called on the government to end legal loan sharking. Currently lenders can charge any price for credit which means some loan and credit companies charge £82 for every £100 lent. Annual interest rate charges of over 2500% are also now common (despite the Bank of England base rate being just 0.5%). Borrowing at these rates repeatedly tips customers into inescapable cycles of debt and poverty. According to the OFT £16,000 of excess profit is made every hour in this sector.

These calls come in the same week that banks reveal vast profits. The campaign highlights that a low Bank of England base rate has not meant cheap credit for customers and further steps must be taken to ensure people have access to low cost, short term, affordable credit. Co-ordinated by the Compass pressure group, this new campaign coalition have called on the government to ban excessive prices for credit and provide alternative sources of credit eg. through credit unions like Wigan based Unify and Welcome. The government has pledged to clampdown on interest rates for credit and store cards and the campaign believes it should do the same for the high cost credit market.

The campaign will be targeting millions of people across Britain through using social networking sites such as Twitter and Facebook.

It is a national scandal that door to door lenders are able to charge extortionate rates of interest legally. The time has now come for a cap on all consumer credit. People should turn away from loan sharks and join one of the two credit unions operating in the Borough - Unify and Welcome.

Credit Unions offer a safe and secure alternative with loans available at low interest rates over an agreed repayment period. They are also a great way to save for the future.

See here for more information about this campaign and to sign up to support the campaign.