Loan firms 'should get rates curb'
Updated on 12 November 2008
Loan companies and store cards should be banned from charging interest rates that are more than five percentage points above the Bank of England's base figure, Labour MP Jim Devine has said.
Some loan companies were charging an "eye-watering" rate of 1355% APR, Mr Devine said, specifically targeting hard-pressed workers.
Even banks were charging 29.9% at a time when the base rate had been slashed to 3%.
Mr Devine (Livingston) told MPs: "It's time we crunched the credit charges."
Introducing a Bill, aimed at capping interest charges, Mr Devine said people using store cards at Burton, Dorothy Perkins or Woolworths faced rates of 29.9%, while those using Argos payment cards could be charged up to 222.7%.
Loan companies were far worse, he said, with Provident Personal Finance charging 183% APR and a company called Logbook Loans offering rates of 437%.
But the highest charging companies were called Payday UK and Early Pay Day Loans who, he said, charged 1,355%.
"These companies are specifically targeting workers who run out of cash before the end of the month, know these individuals have nothing to live on until the next pay day and crucially they have no other means of borrowing," Mr Devine said.
"What all these companies have in common is that they are targeting people in financial difficulties who in many cases have nowhere else to go.
"The banks themselves - banks that we have now taken partly into public ownership - they as well are charging interest rates of 29.9%. Quite frankly, that is totally unacceptable."
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