APR on payday loan ‘staggering 7,200,000%’, warns MP
Published by 24publishing for 24dash.com in Housing and also in Central Government, Communities, Finance
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A Labour MP has called on the Government to commit to firm statutory regulation for payday loan companies after being made aware of one agreement where the APR was a staggering 7,200,000%.
Ann McKechin, Labour MP for Glasgow North, made the call in the House of Commons on Thursday in a Parliamentary exchange with business minister Jo Swinson.
McKechin said: “Scotcash, which represents many vulnerable families in Glasgow, has brought to my attention a payday loan agreement in which the APR is a staggering 7,200,000%. Given that Which? has indicated that more than 48% of those who take out payday loans believe that they will not be able to repay them, is it not now time for the Minister to commit to firm statutory regulation in 2013 rather than relying on wishy-washy voluntary codes?”
Swinson, Lib Dem MP for East Dunbartonshire, said: “The hon. Lady raises two specific issues in her question. Although there is concern about high interest rates, just as when someone hires a car for three days they do not look at the annual cost of doing so, with short-term credit the APR is not necessarily the most relevant statistic. The hon. Lady’s second point was on affordability assessments and the detrimental effect of people being lent money they should not be lent when debt advice would be much more appropriate. That is a significant concern. The Government are considering the Office of Fair Trading’s (OFT) review and the OFT is already taking action—it has opened formal investigations into several payday lenders. We expect the final report early in the new year and the Government are committed to ensuring that we take action on this issue.”