Payday Warning Prompts Crisis Loan Rethink

As insolvency experts today (Wednesday) warn that millions are likely to turn to high-interest payday loans, a parliamentary question tabled by an SNP MP has revealed that the number of consumer credit licences revoked annually by the regulator has more than doubled over recent years.

SNP Work and Pensions spokesperson Eilidh Whiteford MP said stronger regulation was still needed to protect consumers and crack-down on unscrupulous lenders. Dr Whiteford also called for the UK Government to reconsider proposals to cut the availability and level of crisis loans which could drive more people towards high-interest lenders and illegal loan sharks.

Commenting Dr Whiteford said:

“It is clear, both from the insolvency sector warning and the doubling of consumer credit licences being revoked, that strong action is still needed to regulate the consumer credit industry and protect vulnerable individuals.

“This warning comes at a time of general economic uncertainty for many, and at a time of year when many households are struggling to make ends meet with the pressures of Christmas approaching.

“For many these loans are a last resort and, as well as taking action tighten regulation of the industry, the UK Government must also step back from its plans to cut the availability and level of crisis loans. The only winners from this cut by the Coalition Government will be loan sharks and high interest lenders.

“In the wake of this stark warning by the insolvency sector the UK Government must step back from its cruel plan to cut crisis loans.”

1. Reports of the warning by the insolvency sector can be found here:
   http://www.bbc.co.uk/news/uk-16063271
2. A parliamentary question by Dr Whiteford which reveals that there were 39 consumer credit licenses revoked by the Office of Fair Trading (OFT) during 2010/11, up from 16 revoked in 2008/09, and also up from the 27 licences revoked in 2009/10, can be found here:
   http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm111205/text/111205w0005.htm#11120627000583