Speaking up on the front bench
Last week in Parliament I spoke up for Labour’s frontbench in full support of a backbench initiative to persuade the Government to clampdown on excessive interest rates and fees charged by doorstep lenders and home credit companies. These are legal lenders who offer unsecured cash loans of between £50 and £500 to those with poor credit ratings. As there are no caps on interest rates, their rates can range from 271% to 440% to an astounding 4,000% APR or more. So even at the cheap end, if you borrow £300, you would typically have to pay back £10.50 per week for a year, which adds up to £546.
Then there are the home credit companies selling furniture and electronic goods, which target those who are on low incomes or have been refused credit, and sell goods on hire purchase terms. For instance, one such company offers an ACER Gemstone Laptop (typical high street price: £599.00) for £896.25. The customer pays for the laptop over the course of two years, at £19.48 per week, and ends up paying £2,025.93 in total.
It’s no good just putting a cap on interest rates as companies will just up their other charges. That’s why we’re pressing for a regulator who has the powers to curb the overall cost of credit. The Government is willing to take action on credit card interest rates, but seems reluctant to extend this to door-step lenders. So we shall keep campaigning to get better protection for the most vulnerable who are being badly ripped off by doorstep lenders.