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Post by nickd on May 26, 2012 13:26:12 GMT 1
Pay day loans....
too much Wonga? Debt spiral: Bianca Jackson, a character from BBC1s Eastenders found herself in debt
after taking out payday loans to pay household bills. MP Stella
Creasy is using the storyline to demonstrate her campaign for
a cap on the cost of lending.MP Stella Creasy's 'Bianca' campaignBackgroundThe cost of payday loans should be capped to protect consumers, according to Labour MP Stella Creasy. The MP is campaigning for an amendment to the Financial Services Bill which will give the new Financial Conduct Authority the power to cap the charges made for credit and the cost of borrowing. Payday loans are designed to tide consumers over until their next wage instalment - but they often come with eye watering high rates of interest, sometimes in excess of 4000 per cent. Debt spiral: Bianca Jackson, a character from BBC1s Eastenders found herself in debt after taking out payday loans to pay household bills. MP Stella Creasy is using the storyline to demonstrate her campaign for a cap on the cost of lending. Today, Stella Creasy announced research ahead of the vote in parliament today on the amendment. The independent research commissioned by insolvency practitioners R3 revealed that 98 per cent of MPs and 93 per cent of the public believe there is a problem with payday lending. In further support for the campaign, 66 per cent of MPs, across the parties, and 65 per cent of the public support the total cap on credit. Stella Creasy, MP for Walthamstow, said: 'This amendment, which has cross party support, would give the new financial regulator the ability to cap what these firms can charge. 'Without this amendment the Government is setting up the new regulator to fail as lawyers will fight such action and in an industry making millions out of charging extortionate rates of interest for credit fines will only have a limited effect.' Ms Creasy, who started her campaign in 2010, has been calling for support from other MPs via Twitter by encouraging users to tweet their MPs to ask for their vote in favour of the amendment. As part of the social media campaign she has been using the hashtag #savebianca in reference to the character of Bianca Jackson in BBC1 soap EastEnders. The character played by actress Patsy Palmer found herself slipping into unmanageable levels of debt after taking out payday loans to pay household bills. Advice agencies are seeing thousands of real life people like Eastender's Bianca, but unlike the actress they can't leave the stage and forget about them - these problems are escalating out of control.
Mylegal takes a look at Stella Creasy's campaign...Read more: www.thisismoney.co.uk/money/cardsloans/article-2148026/Cap-pay-day-loan-rates-save-Bianca-MP-Stella-Creasy-leads-campaign-legal-loan-sharks.html#ixzz1vygTAnYj
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Post by nickd on May 26, 2012 15:45:37 GMT 1
Stella vows to continue campaign for credit caps as Government scuppers opportunity to protect public from legal loan sharks Yesterday evening Stella was disappointed as yet again the Government rejected Labour attempts to protect consumers from the problems caused by payday lending.Stella moved a cross party amendment to the Financial Services Bill which would have allowed the regulator to cap the cost of credit if a financial product was judged to cause ‘consumer detriment’. Despite the support of several Conservative MPs, the Government whipped its MPs to reject the amendment. The Government’s rejection of this reform came on the same day as new research was published which showed that 98% of MPs and 93% of the public believe there is a problem with payday lending. 66% of MPs and 65% of the public also support a cap on the total cost of credit. Stella said: ‘Residents of Walthamstow are suffering in our current economic climate as the cost of living rises, and wage freezes and unemployment hit their household incomes. I know from talking to them how they are turning to credit from these companies to make ends meet. They lend money at extortionate rates of interest that can cause a cycle of debt for many, with one in three payday loans being taken out to pay off other payday loans. This amendment to the Financial Services Bill would have sent a message to the industry that their worst excesses would no longer be tolerated. Despite saying they support action, too many Government MPs didn’t have the guts to stand up for the people they represent. By voting against this proposal, this Government has shown just how out of touch it is with the rest of the country. The research is clear – across Britain everyone else overwhelmingly backs our proposals to take action to tackle the debts that payday lending can cause and to give UK consumers the same protection others round the world enjoy. We will now take the fight for this proposal to the House of Lords as this isn’t over – residents in Walthamstow should know that whilst the Government may sit on its hands, we will continue to campaign for an end to legal loan sharking in Britain.’ Stella moved and voted in favour of Amendment 40 to the Financial Services Bill. The outcome of this vote was 225 to 266 with over 20 Government MPs choosing to abstain on the matter or vote for it.With so much concern over firms like Wonga surely it is right to impose a cap on how much they can lend?Mylegal comment
Stella Creasy is a Labour MP who has campaigned vigorously for control over pay loan companies. These firms continue to charge exorbitant interest rates as advice agencies end up seeing more and more people who get end up getting caught in a relentless trap. Most people probably understand the loans are short term but they borrow because they can't make ends meet, they don't realize how much it increases if they don't pay it off in time. Borrowers from the lowest income groups realize they can't pay them off and end up incurring huge interest rates as the debt just goes on multiplying out of control. The higher the debt, the less able the borrower is able to repay the amount, a fair few end up going to other pay day loan firms just to make the payments on what they already owe. You would think government would support any amendment to bring this under control in a day and age when their is so much accent on not being able to 'borrow your way out of debt'.
Back Stella Creasy MP's campaign for a cap on Pay Day loans... www.workingforwalthamstow.org.uk/?p=1721
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Post by nickd on May 26, 2012 15:57:49 GMT 1
 Citizens Advice supports OFT’s Review into Payday Lending Gillian Guy - CEO of Citizens AdviceCAB Press release..24 February 2012 Gillian Guy, Chief Executive at national charity Citizens Advice said: “This review is urgently needed.
"Four times more people are coming to us with payday loan problems compared to a couple of years ago. Worryingly, more and more people are being treated unfairly, being offered loans they can't afford to repay and put onto rollover loans with huge interest rates and charges.
"People in long-term financial difficulty with other debts are much more likely to take out a payday loan to try and deal with these problems.
We're very pleased the OFT is taking steps to clamp down on unacceptable practices in the payday lending industry. We want to see them take swift action to root out the rogue lenders once and for all."CAB see the people affected - they want swift action to root out rogue lendersCAB have fought hard to raise awareness over the risks imposed by pay day loans firms like Wonga and it's good to see their Chief Executive officer take a firm view on how rogue lenders should be swiftly identified and rooted out. www.citizensadvice.org.uk/index/pressoffice/press_index/press_20120224.htm |
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Post by nickd on May 26, 2012 16:28:50 GMT 1
Stella Creasy's campaign....
Campaigning for total cost cap mechanism
Have a listen to Stella's argument as she sets out why she has brought this campaign. Make up your own mind as to whether you think it's right that these firms are in some way brought under stricter control. A maximum cap on the amount people could borrow would ensure that it could never go above a certain level.
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Post by nickd on May 26, 2012 16:47:51 GMT 1
Stella Creasy's concern over emerging UK market Pay day loan firms see us as an easy target In Parliament on the 23rd April 2012...
Stella Creasy: "We should listen to the companies themselves. They state explicitly that they are coming to the UK and expanding their operations here at an alarming rate precisely because of the lack of regulation of our payday industry in comparison with other countries. They are clear that, because we do not have that regulation, we are fertile territory for their practices."The question this raises...
Are we forgoing tighter regulation for the sake of economic growth? Make no mistake about it, government is desperate for economic growth in the UK. Paying so little regard to how it is achieved could be viewed as irresponsible if pay day loan firms are just allowed to profit from the poorer sections of society with no firm control. Concern has arisen over Wonga and other firms for some time, it's pointless questioning what they do if we are not prepared to press for tighter limits on the amount they can lend. You have to ask yourself if Government is too loose on regulation in order to attract this kind of lending industry to the UK? www.publications.parliament.uk/pa/cm201212/cmhansrd/cm120423/debtext/120423-0002.htm#1204234001694
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Post by nickd on May 26, 2012 16:54:15 GMT 1
All party consensus in debate MP's constructively debate ...Neil Parish (Tiverton and Honiton) (Con): "I apologise to the House for not being here at the start of the debate.
I congratulate the hon. Member for Walthamstow (Stella Creasy) on her amendment 40, because payday loans and doorstep lending are a huge problem. There are many loan sharks out there and they need to be put back in their boxes. We need serious financial health warnings about their conduct, so that our constituents have some idea of how much they are borrowing and how much they will have to repay. For instance, anyone borrowing £100 at 2000% will have to pay back up to £2,000. That needs to be clearly laid out when people are taking out such loans. As has been pointed out, APRs—annual percentage rates—are not always understood by our constituents. Therefore, if they could see exactly what they had to repay, they would be much less likely to take out such loans."
Lorely Burt: "The point of payday lending is that it should be for a very short period. Such issues arise when there are innumerable roll-overs, as outlined by the hon. Member for Walthamstow (Stella Creasy). What we hope the industry will do and the review will achieve is either to confine roll-overs to a small number or to abolish them altogether, which would address the problem of the £2,000, which no one in this Chamber wants to see."
Neil Parish: "The hon. Lady is absolutely right. It needs to be clearly set out when people take out a loan that such sums could be the result if they are unable to repay it. Let us consider the analogy of tobacco. We no longer allow tobacco advertising, and shops cannot even display packets of cigarettes any more, yet people can ring up Wonga on their mobile phone and take out a loan for which they will be charged 4,214% interest."
Where it all goes wrong is when it comes to the vote...If you read or listen to what they say in many parliamentary debates, there is often cross party agreement on the points made. Unfortunately when it comes to the vote, members of Parliament get 'whipped' into voting either for or against the amendment. In this case, there were many excellent points made in support of the amendment put forward by Stella Creasy but there was a majority against it when it came to the vote. Notably there were no Liberals who voted for the amendment and only two Conservatives abstained. Pay day loan firms have come in for a great deal of criticism including using scare tactics to recover their debts; the OFT criticised them for sending letters to people alleging they would be investigated for fraud. The OFT condemned these frightening tactics and said they should cease. Government has made a lot of criticism aimed at the previous administration for failing to regulate the banks; yet they fail to reign in firms who are out to make money out of individuals who all to easily fall prey to restricted sources of credit. The credit squeeze forces individuals with the least money into paying the highest price for borrowing, it is very difficult to access more affordable borrowing.
Far too many MP's fail to listen to the debate then flood in to vote - as a result Stella Creasy's amendment was not passed.
The vote was 225 for and 266 against; meaning the Government did not agree pay day loan firms should be capped in how much they could lend.Read more here www.publications.parliament.uk/pa....m#1204234001694
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Post by nickd on May 26, 2012 16:57:33 GMT 1
Citizens Advice joins forces with Wonga for debt research An unlikely partnership?"An unlikely partnership between Medway's Citizens Advice and payday lender Wonga aims to discover more about consumer borrowing A Citizens Advice bureau is joining forces with the payday lender Wonga to research the finances and borrowing experiences of consumers. The controversial and high-profile lender is providing technological support and paying for Citizens Advice employees in the Medway area of Kent to be trained by a professional research company to question between 6,000 and 10,000 people about their employment, income status and debts. The partnership will seem strange to those who have followed the debate about the dubious business methods of some payday lenders and the extremely high charges on their loans. Wonga has been criticised for charging interest rates of 4,214% APR. Dan McDonald, chief executive of the Medway bureau, said his organisation had formed a relationship with Wonga after the Observer published an article about a client's problems in repaying a loan. The relationship had helped advisers deal with clients' problems more effectively and both organisations hoped the research would be influential in forming government strategy on lending in the UK. "In 2010, 12,000 clients came to see us with an average unsecured debt of £18,000. Last year the average debt of the 36,000 clients coming in to see us was £43,000. Over the next 18 months, things are going to get worse: this will give us a clear picture of what is going on," he said." There has been a mixed reaction to Medway CAB being commissioned by Wonga in the preparation of their report. Some Labour MP's and members of the public (via comment blogs) have seriously questioned whether it was right to write a report about one of the pay day loan firms which CAB has been vigorously campaigning against. Medway CAB launched a media campaign, it could be viewed as an error or judgement by potentially compromising their impartiality. Should they have remained at arms length? Equally it could be said that if if advice agencies were funded more properly by the State then it would help to ensure their integrity is not compromised in situations like this. Without the necessary 'wonga' to fund properly resourced advice, agencies will arguably be forced into situations like this. The financial sector funds a fair amount of debt advice including that which is aimed at improving financial inclusion but accepting a payment for preparing a report for a firm you are campaigning against seems questionable. What do you think?Read more: www.guardian.co.uk/money/2012/may/20/citizens-advice-wonga-researchwww.labourmatters.com/medway-labour/medway-labour-shocked-cab-debt-research-to-be-funded-by-wonga/?utm_source=twitterfeed&utm_medium=twitter
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Post by nickd on May 26, 2012 22:47:52 GMT 1
So Wonga....www.youtube.com/user/wonga?v=8SYCFeWdj1YCarries on getting the WONGAGovernment.... Will have something to smile about if they see economic growthAdvice agencies... Could end up compromising their
impartiality or face closure.And the poorest in society.... Continues to pay the price as the bailiff moves in.
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Post by nickd on May 27, 2012 0:25:48 GMT 1
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