Cheshire East welcomes new law to cap payday loan costs

 

Cheshire East Council leader Councillor Michael Jones has welcomed a new law to cap the cost of payday loans.

This week, the Government announced it is to introduce the law following practical steps taken by Cheshire East Council to ban access to the top 50 payday lending websites on its public computers, one of the first councils in England to do so.

Councillor Jones said: “It is good to see the Government is following our lead and will now introduce strict laws.

“We want to protect the most vulnerable of people from falling into the trap of borrowing money at astronomical rates of interest.

“We took our own steps to tackle these companies after being inundated by complaints from the public. I’ve even been told about one woman borrowing £100 and ending up with a £17,000 debt. It is scandalous.”

One payday loan firm was found by councillors to be charging interest of more than 5,850 per cent.

Just last month, the entire Cheshire East Council Cabinet and many councillors signed up ‘en masse’ to become members of the local Cheshire Neighbours Credit Union (CNCU) in its fight to take on ‘rip-off’ payday loan firms.

The Financial Conduct Authority (FCA), which takes over regulation of the sector in April, already has the power to cap the cost of payday loans and has proposed several new rules intended to protect consumers.

But in an amendment to the banking reform bill going through parliament, Chancellor George Osborne has ‘put a duty on the FCA’ to use its powers to impose a cap and called it a ‘logical step’.