‘Horrified’ MPs poised to crack down on payday loans with sky-high rates
July 20, 2011 by admin
Filed under Cash Advances
A new lending code to protect payday borrowers who take out small sums for short periods has been condemned by MPs amid calls for far tighter policing.
Payday borrowing is highly controversial with critics attacking exploitative rates.
The Consumer Finance Association, which represents big payday lenders, argues that loan costs are misunderstood.
It says that most customers borrow a few hundred pounds over a few months with costs ranging from £4 to £30 per £100.
When calculated as annual percentage rates, however, the figures look shocking, generally working out at more than 1,000 per cent.
The Lending Code for Small Cash Advances unveiled last week was the CFAs attempt to calm criticism by promising to explain costs fairly and set credit limits.
But the code has already been attacked by MPs who want caps on rates and formal regulation. Stella Creasy, Labour MP for Walthamstow, east London, says: Frankly, if lenders are not already doing whats in this code, Im horrified.
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