Restrictions on loan sharks fail
Government opposes cap proposal
An attempt to restrict the power of legal ‘loan sharks’ has been rejected by the House of Commons after the government opposed the measure. There is currently no upper limit on the interest that doorstep-lending companies may legally charge in the UK.
A proposal by Labour MP Stella Creasy to introduce a cap was defeated on 3 February by 271 votes to 156. But MPs voted in favour of encouraging regulators to consider a range of caps, even though not enforced by legislation.
Business minister Edward Davey said that there is ‘limited evidence’ that a cap would be effective. But Church Action on Poverty insist there is ‘plenty of evidence’ of successful caps in the US and Europe.
Supporters of the ‘End Legal Loan Sharking’ campaign accuse ‘loan sharks’ of preying on vulnerable people who do not have access to mainstream bank loans. They quote examples of people being charged eighty-three per cent in interest. The Consumer Credit Association, who represent loan companies, have lobbied against a change in the law.
