MSP bids to halt payday loan firms

PAYDAY loan firms charging "oppressive" interest rates should be shut down, according to a Glasgow MSP.

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Bob Doris, SNP MSP for Glasgow, wants the new Financial Conduct Authority to remove licences from firms issuing loans without proper credit checks and charging huge interest rates.

He has written to the agency asking it to use existing powers to tackle the proliferation of high interest loan shops operating in areas of high deprivation.

Mr Doris said firms had been shut down before for acting in a deceitful and oppressive manner.

He argued that not carrying out checks to ensure the borrower can repay is deceitful, and that charging interests rates of more than 1000% APR is oppressive.

In a letter to Martin Wheatley, chief executive of the FCA, Mr Doris said: "Citizens Advice Scotland have reported that a hundred families present to them every week with problems related to paying these loans.

"It is a particular issue in areas of high deprivation, such as Maryhill, Springburn and Rutherglen - the region I represent - where such shops tend to proliferate."

The city council is also looking at measures to reduce the impact of high interest lenders and has blocked access to their websites from council-owned computers. The Scottish Government has convened a meeting to discuss the issue this year.

Mr Doris said: "The Office of Fair Trading made very limited inroads into tackling irresponsible lenders who, without doing even the most basic credit checks, charge eye-watering levels of interest to some of the most vulnerable people. Its successor, the FCA, must go much further.

"This does not require additional powers - the FCA can already withdraw credit licenses from oppressive lenders. It must take action. I have written to the FCA asking them to clarify what they consider to be an oppressive rate of interest: 1000%, 2000%, 3000% APR?"

Glasgow City Council also wants to be able to take tougher action on firms it believes are preying on people in poorer communities and only increasing the debt burden.

It wants to have powers from the Scottish Government to allow councillors to refuse planning permission for payday loan and cheque cashing businesses, as well as betting shops that have fixed odds betting terminals, which often open next door to each other.

stewart.paterson@eveningtimes.co.uk

Local government

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