Lord Borrie
Main Page: Lord Borrie (Labour - Life peer)
Baroness Wilcox
My noble friend is absolutely right: credit unions are the way to go. Why they have never taken off in Great Britain, I will never know. For years and years consumer groups have tried to get people to save with credit unions. However, the Department for Work and Pensions will shortly report on its study on how we can best support these credit unions, which wish to extend their services to benefit many more customers.
Lord Borrie
Will the Minister indicate whether she agrees that percentage rates, including the annual percentage rate for loans which are available for only a short period, are often highly misleading? Indeed, they may suggest that the costs are far higher than they really are. Does she agree that what is needed by the consumer is cost in pounds and pence for each day that the loan is available, and information on whether there are administration costs or other costs? That clarification would be much more helpful than a mere percentage sign and a number.
Baroness Wilcox
I have to agree with every word that the noble Lord has said. He is a past director of the Office of Fair Trading and extremely well informed on this matter and together we have done much work on it over the years. There is no doubt that the APR should be replaced, certainly with a total cost of credit. We know that APRs are not the clearest way to show exactly how much short-term loans, such as payday loans, cost. It sounds terribly frightening to hear the figure £2,000. However, as we know, people borrow this money for a short number of days. The information they want is how much the loan will cost them for the short number of days they need to borrow it. As I say, I agree completely with the noble Lord’s remarks.