PAYDAY loans, that can carry interest rates of up to 5000% APR are under attack in the Borders, with politicians and the local Citizens Advice Bureau working together to highlight the alternative - using the Capital Credit Union with more local access points to make it easier to use.
East Berwickshire councillor David Raw put forward a motion to Scottish Borders Council today that reads: “That SBC deplores the extraordinarily high level of APR interest charged on payday loans and asks the Westminster and Holyrood Parliaments to legislate that the top half of all payday advertisements in the media and on line display in bold type the APR interest and the penalties for not repaying in time.”
“There has been an increase in the number of folk who have been using payday loans on line and the APR rates are horrendous,” said Councillor Raw. “It looks easy and the adverts are enticing but CABs are finding more and more people have got themselve into a mess with payday loans.”
Greater access to the Capital Credit Union, based in Edinburgh and licensed to cover the Borders, is key according to Councillor Raw who suggests that this could be through CABs, registered social landlords such as Berwickshire Housing Association, and council contact centres. Capital Credit Union has launched their Swift500 easily accessible loan with an APR rate of 26.6 per cent to challenge the payday lenders. Payday loan rates on www.moneysupermarket.com at the end of November were: Quick Quid 1734%; Kwik Cash 1737%; Payday Express 1737.2%; Wonga.com 4214%.
“What I want to achieve is a more face-to-face enterprise,” added Councillor Raw.
Borders MP Michael Moore agrees and said: “Here in the Borders I know that lack of affordable credit is an important issue for many local people and there is huge concern about the behaviour of some lenders who provide ‘payday loans’ and charge extortionate interest rates. The UK’s Office of Fair Trading has recognised this problem and announced a review of its Irresponsible Lending Guidance that will specifically target the payday lending market. The UK Government have also consulted on the future of the consumer credit regime as a whole and will be announcing the action it will take.
“Another way of tackling the activity of loan sharks is through the excellent work of Credit Unions who provide affordable loans and other financial services to people who might otherwise be financially excluded. Here in the Borders I have met with our local Citizens’ Advice Bureau and others to discuss Credit Unions and how we can promote the fantastic services they provide.The UK Government are also absolutely committed to the growth of Credit Unions and last year we announced a new £73 million fund to expand and modernise the service, particularly through a stronger link-up between Credit Unions and the Post Office.
“I personally will be continuing my work with the CAB and other local groups to ensure that Borderers benefit from the services provided by Credit Unions. Through the action taken by the UK Government I am sure we’ll also see a growth in Credit Unions across the Borders which will be brilliant news for local people.”
And Rhona Calder of Berwickshire CAB added: “It is the feeling of the staff within Roxburgh and Berwicksire CAB that if Credit Union access points were to be set up in our area it could substantially ease financial problems for our clients. We feel that they would be able to keep track of their income, develop budgeting and financial skills, and should they need to take out a loan to help make a major purchase it may be possible for them to do so.”