A LOAN company that charges interest rates of 189% has been accused of exploiting the poorest of the poor.

A LOAN company that charges interest rates of 189% has been accused of exploiting the poorest of the poor.

Now calls are increasing for legislation to be introduced to cap the interest loan firms can charge at around 20%.

Glasgow councillor George Redmond, who also manages an East End credit union, hit out over the rates offered by Provident Personal Credit, a UK wide loan firm.

The company's own figures show loans over 57 weeks with an annual percentage rate (APR) of 189.2% and loans taken out over 106 weeks with a rate of 133.6%.

Its advertising illustrates a loan of £300 being repaid at £9 a week over 57 weeks. That would total £513 - an APR of 189%.

The Provident table also shows someone borrowing £1000 over 106 weeks would repay a total of £2120 - 133.6% The same loan taken out through Mr Redmond's BCD credit union would result in a total repayment of just £1063.

He said: "The poorest people in our society are being charged exorbitant rates and there should be a cap on the interest companies can charge.

"It is an outrage they can charge these rates - but they are getting away with it.

"What we need is legislation that restricts the amount of interest firms can charge."

His call for an interest rate cap was backed by Mike Dailly, principal solicitor at Govan Law Centre.

Mr Dailly said: "Until 1974 the maximum interest rate you could charge in the UK was 48%, but that was abolished and there is now no interest rate maximum.

"Govan Law Centre has been calling for a statutory interest rate cap of 20%.

"Many European countries have a cap, including France and Germany."

"The Scottish Government should give extra money to credit unions to employ staff to go round the most vulnerable households."

A Provident spokesman defended its interest rates.

He said: "Our charging structure is fundamentally different to that of other lenders.

"Provident home credit has a single, up-front, fixed charge customers see from the start, which includes the cost of setting up the loan, the interest, the cost of the agent's weekly visit and the fact the total amount to repay will never go up - even if payments are missed.

"Other lenders do not include administration and penalty charges in their annual percentage rates and do not have the expense of making over 80 million home visits a year, so comparisons with other credit options using APR are misleading."