End Legal Loansharking
Compass are currently running a campaign to introduce a cap on interest rates and stop companies, such as Wonga, from charging disgusting interest rates of up 3700% on short term loans. These companies target the poorest in society, who are dependant on them in a time of austerity. There is currently a Private Member's bill in its second reading going through Parliament. It is facing a backbench business committee vote as a cross-bench bill (a similar situation to the Gurkha bill) and a petition would raise awareness of this exploitation and aid its transition into law.
This needs urgent intervention as the majority of these firms use names like Auto Money,Quick Cash,Mojo Money and are actually USA Companies with HQ in the States.The most worrying of this attack on poor and vulnerable people who find they are getting into deeper debt situations is the Growth of adverts to Join The Forces and of more concern NHS adverts for taking part in CLINICAL TRIALS with renumeration from £100 to £3500.This is a situation not unlike the US blood for $10 donor system and needs to be investigated.
Susan Simmons commented
Stop these disgusting companies how do they sleep at night!!
Jake Clausen commented
This campaign is also supported by by Stella Creasy MP. In a recent PMQ Labour's Stella Creasy asks when the government will impose caps on payday lending interest rates.
Cameron says the new financial regulators have to address this problem.
But can we wait that long?
For further info you can find info on http://www.guardian.co.uk/search?q=stella+creasy§ion= where a selection of articles can be found on the campaign.
It is noteworthy of course that the Conservative party donor and venture capitalist Adrian Beecroft stands to benefit if the company succeeds with its flotation plans.
Beecroft, [who has proposed to abolish dismissal notices!] and who has donated £537,076 to the Tories, is chairman of private equity firm Dawn Capital, which is one of the biggest holders of Wonga's stock.[One of the main payday loan companies!]
The article by Hilary Osborne 'Payday lenders and pawn shops change the face of Britain's high streets' is alos relevant! http://www.guardian.co.uk/money/2012/may/26/payday-lenders-pawnbrokers-britains-high-streets?INTCMP=SRCH
Kate Prentice commented
It is outrageous that these payday loan companies charging enormous interest rates are legal. They need to be abolised as they are clearly popping up to exploit people who are vulnerable.
Pauline Masterman commented
Payday loans are ONLY for people who definitely know that they can pay them back on time. They are horrendous, the more I hear about them the worse it gets. It is a downward spiral with these loans.
Cameron Cooke commented
Never used one myself but I think this area is seriously under regulated. I think it's quite worrying that when millions of people are unemployed in a time of austerity that 1000's of these companies have come out of nowhere and are exploiting the poorest people in our society.
The entire business model of these companies is that the majority of the people won't be able to pay the loan back within the agreed timescales and will end up paying back ten or more time the amount that they originally borrowed.
I think the government should either ban Pay Day Loan companies or regulate them heavily. Lets not forget it was partly the lack of government regulation of the UK banks that got us into financial crisis. Surely we can't make the same mistakes again allowing lending to lend to people that are poor and can't afford to pay these loans back.
Yes everyone is responsible for their own actions but these companies are tempting and exploiting desperate people.
Gavin Boyd commented
Payday lenders charge APRs of several thousand %. They market their loans as for the short term but many borrowers find themselves caught in a long-term debt trap. £100 borrowed at an APR of 4214% for 1 year would cost £4314!!! Some states in US ban payday lenders outright and other countries put a limit on the APR. Labour MP Stella Creasy is campaigning for a cap on payday loan charges.
Marcia Simpson-James commented
The FSA should intervene on these companies. The next thing they'll be asking for is a pound of flesh like Mr Shylock.
3700% is less than they are now charging, but once it approaches anything more than double figures it is obscene. It encourages poorly paid people to anticipate their wage, then takes more off them so they have little choice but to do the same next time. It is soon a spiral and I am amazed if anyone can get out of it. I saw the adverts on the tube when down in London and Wonga justified it by saying that the rate was not important, as the amount of interest charged was small. I do not know how they sleep at night.