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Govt poised to regulate payday loans

London UK Thames Parliament 480

The Government is poised to regulate the payday loans sector unless it creates a robust system of self-regulation.

Labour peer and Consumer Credit Counselling Service chair Lord Wilf Stevenson has pledged to lodge an amendment in the Financial Services Bill committing the Government to take action within a year.

The amendment was originally rejected in the Commons but Lord Stevenson is confident that changes to the Treasury team may see it accepted.

Speaking at a fringe event at the Liberal Democrat conference in Brighton yesterday, Lord Stevenson said: “Now we have personnel changes so maybe when we put down the same amendment in the Lords the Government will be able to accept it. The amendment calls on the financial authorities to come up with a scheme for regulating high-cost loans, or payday loans, within a year.

“The truth is that the people who earn least in our society have the most need to have access to short-term borrowing such a payday lenders so they can just get through the year.”

Speaking alongside Lord Stevenson, deputy chief whip Lord Dick Newby said the Government is ready to act.

He said: “Payday loans are a problem and the sector has said it will produce a code of conduct which will protect individuals from abusive behaviour by them.

“The Government’s view is that if they can do it quickly then that is fine but if they don’t then something will have to be done in this area. Self-regulation is good if you can get it but the track record of self-regulation is mixed.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Send in the FSA. They will be able to decimate this bit of the financial sector in the same way it has done to the advice sector.

  2. Headline should have read “Payday Loans To Cost More”

  3. Just what is meant by “the government”? The FCA or the MoJ?

    Clearly, pay day loans are the most toxic form of unsecured borrowing but, if pay day loans are to be subject to regulation, then why not all forms of unsecured borrowing such as credit and store cards? Shouldn’t the government be concerned about addressing (e.g. limiting) the nationwide problem of people being able so easily to rack up personal debts that can so easily spiral beyond the means of the borrower to repay? Is it not a crazy situation whereby it’s easier to run up £100,000 of unsecured debt on plastic and on an open-ended basis than it is to borrow a similar amount secured against bricks and mortar? If the government’s going to address the problem of personal debt, why tackle only a small, albeit the worst, part of it? Why not do the job properly?

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