THE Green Party conference has called on the government to strongly regulate payday loans, which it called “modern day loan sharking”.
Since 2008, the number and size of companies charging eye-watering levels of interest has exploded, with more and more individuals with poor credit scores taking out such loans.
Every year 1.2 million Britons turn to payday loans and £1.2 billion is borrowed, often at around 2500% interest a year. Citizens Advice is reporting that 10% of the people coming to it with debt problems now have payday loans*.
The Green Party is calling for the capping of short-term loan rates at reasonable levels linked to the Bank of England interest rate, and demanded that companies make sufficient credit checks, with the threat of severe penalties if they fail to comply.
Camden Green Party member Benali Hamdache, the motion`s proposer: said "The ethics and practices of payday loan companies are of grave concern.
“They are preying on people with poor credit ratings and precarious financial situations.
“Clearly everyone needs access to credit. The rise of these lenders is the result not only of inadequate regulation, but also the failure of the government to adequately support and provide a healthy climate for credit unions and other ethical lenders."
"The runaway profiteering off the back of the vulnerable must end. I am proud that the Green Party is the first party with firm commitments to limit the extortionate charges on payday loans."