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Worcester MP says new rules should govern pay-day lending
CONTROVERSIAL pay day lenders have been attacked by Worcester’s MP – who says he has been shocked by recent examples of people being ripped off in the city.
Robin Walker has used a parliamentary speech to criticise ‘crisis’ lenders, who levy massive interest rates to desperate people.
He says in recent weeks he’s received troubling correspondence from Worcester people who are struggling to pay off the loans, which can have interest rates up to 5,000 per cent.
In one case, a resident had taken out six pay day loans and was being “crippled” by the interest on them.
And in a second case, a Worcester pensioner got into “thousands of pounds of debt” before they could pay a loan off.
Now, Mr Walker is urging the Government to work with the industry to set up an independent advice service which people can go to for help.
He says the stakes over his idea, which he first raised in July, are becoming even more acute given the problems constituents are having.
“Someone had six separate loans from payday lenders, which clearly cannot be justified on the basis of seeing them through until payday, and they were being absolutely crippled by the interest,” he said.
“In another case, a pensioner living on the basic pension got thousands of pounds in debt to payday lenders – a clear sign that some of these businesses are not looking at the affordability criteria.”
He says it is “crucial” householders are given better advice on the loans they are taking out, and the consequences of taking out several at one time.
Ministers have pledged to continue looking into the situation following the House of Commons debate.
Moves in the future could include levying a new tax on pay day loan companies which can be used to fund an independent advice scheme.
After the speech, Mr Walker told your Worcester News that he was deeply concerned about the industry.
“The example of a pensioner getting a pay day loan is clearly not right,” he said.
“It’s a wrong situation for someone to be in and we’ve got to keep raising examples of bad practice when we see it.”
A variety of High Street names now offer cash to people by marketing them as ‘pay-day loans’ – in other words, you pay it back after getting your salary.
But people can find themselves stung by huge interest rates or penalties for missing a payment date.