Shapps helps to defeat 'payday loans' cap

Published by Jon Land for 24dash.com in Central Government and also in Bill Payments, Housing

Housing Minister Grant Shapps has helped to defeat an amendment to the Financial Services Bill that would have capped the total costs that can be charged for 'payday loans'.

Shapps was among 266 MPs who voted against the amendment, put forward by the Labour MP Stella Creasy. Creasy has fought a long-running campaign against high street lenders such as Wonga and The Money Shop, branding them "legal loan sharks" for the high rates of interest they charge.

Three Conservative MPs - Zac Goldsmith, Mark Reckless and Philip Hollobone - backed the proposed changes to the Bill, which would have given the new Financial Conduct Authority the ability to "make rules or apply a sanction to authorised persons who offer credit on terms that the FCA judge to cause consumer detriment".

This would have included rules that determine "a maximum total cost for consumers of a product and determine the maximum duration of a supply of a product or service to an individual consumer".

Although the amendment was defeated by 41 votes, Stella Creasy was encouraged by the number of abstentions and praised the Tory MPs that had defied Government whips.

She tweeted: "Brave Tories deserve plaudits for joining fight to tackle legal loansharking." Not one Liberal Democrat MP backed Creasy's amendment.

After the vote, Stella Creasy said: “We want to give the financial regulator the power to cap the costs of credit.

"This would give British consumers the same protection others around the world enjoy.

“By not giving the regulator the power to intervene in this way, the Government is setting it up to fail."

Creasy said she would now take her fight to the House of Lords.