SO-CALLED “pay day loans”, often with very high rates of interest, must be investigated and regulated says North West MEP Paul Nuttall.
He has written to all the MPs in his North West constituency, which includes Ribble Valley, Burnley and Pendle, urging them to take action over pay day loans.
“I feel really strongly about these loans and the iniquitous rate of interest charged for them,” explained Mr Nuttall, who is Deputy Leader of the UK Independence Party.
Following a recent report by insolvency trade body R3 revealing potentially five million British adults are tempted to take out a short-term loan over the next six months Mr Nuttall sent out a warning to residents.
“They may be short-term, but they are high cost and can result in alarming interest rates of more than 1,500%,” he said.
“If people are considering taking such a loan I earnestly urge them to read the small print very carefully first and not make a hasty decision. These loans snare people into cycles of debt and however desperate they are now, their situation will only worsen with more debts they cannot pay.”
Mr Nuttall has now taken his campaign against these pay day loans to another level by writing to every MP in the North West enlisting their support for compulsory regulation. At present the Government is waiting to see if pay day lenders improve their behaviour through voluntary codes of conduct being implemented by the four trade associations.
“I believe instead the Government should act, as it is plain self-regulation is not working,” said Mr Nuttall. “This is an urgent matter, the R3 survey shows an approximate 50% increase in people considering taking out such a loan since this time last year.
“Some of these companies incredibly have APRs of a staggering 4,000%. Even at the rate of 1,737% a loan of £300 means paying back £375 if you borrowed the money for 30 days,” said Mr Nuttall.
“This type of loan plays on people’s desperation and vulnerability and lending to people on benefits, is as it the case with some companies, is neither responsible nor just.”