An MP has proposed a private members bill against payday lenders who are alleged to be failing to honour promises to treat customers fairly and protect vulnerable consumers.
Paul Blomfield, Labour MP for Sheffield Central, proposed the bill following evidence from Citizens Advice which found that some payday lenders are not checking if people can afford to pay back loans or freezing interest rates and charges for those struggling to repay.
Gillian Guy, chief executive of the Citizens Advice, said her organisation has exposed the shocking failure of payday lenders to stand by their own commitments to treat people fairly.
She added: “Instead people who can’t afford to pay back loans are handed one after the other, resulting in many customers drowning in debt as interest rates and charges exacerbate problems.
“Celebrity endorsement, cartoon characters and football sponsorship deals lucratively advertise payday loans as a short-term fix, masking the long-term hardship that often follows.
“This private members bill is a step towards protecting people from predatory practices and overcoming the problems payday lenders failed to address by breaking their promises to customers.”
Carl Packman, author of Loan Sharks: The Rise and Rise of Payday Lending, added: “After seeing recent damning reports from Which?, Citizens Advice, and findings from an investigation by the Office for Fair Trading, I’m worried that the regulators are not properly addressing the problems caused by payday lenders.
“Tougher regulation is needed, and regulatory “teeth” is what has been promised by the Financial Conduct Authority (FCA) when it takes over regulation of payday lending in April 2014.”