“Scourge” of payday loans needs to be addressed

Wales’ Minister for Tackling Poverty, Huw Lewis, has met with the Office of Fair Trading to call on regulators to ‘throw the full force of their powers’ to tackle the ‘scourge’ of payday loans (Tues 14th May).

He’s held talks with Kyla Brand, the Office of Fair Trading’s representative for Scotland, Wales & Northern Ireland. Her office contacted the Minister after he responded to an OFT consultation looking into the practices of payday loan companies. The OFT want to refer the payday loan market to the Competition Commission. There are currently an estimated 50 payday lenders in the UK in a sector worth £2 billion.

Recently the StepChange debt charity released figures showing that twice as many people who sought help with debts in 2012 had payday loans compared with 2011. The charity helped 36,413 people last year who had payday loan debts, 20,000 more than the previous year.

Speaking after the meeting in Cardiff, Communities & Tackling Poverty Minister Huw Lewis said:

“I welcome this opportunity to express my deep concerns face-to-face with the OFT about the impact payday loan firms are having across the country.

“In these extremely tough economic times they are a scourge on many communities as other forms of credit simply dry up. Many people with nowhere else to turn are being tempted to use loans with massive interest rates just to make it to the end of the month.

“Regulators need to do all they can to examine the practices of these companies to make sure those in perilous financial circumstances are given the right protection. I whole heartedly support the OFT’s inquiry and their call for a full investigation by the Competition Commission. The time has come for regulators to throw the full force of their powers behind this issue.”