Payday Loans: Debt Collection

Lord Kennedy of Southwark Excerpts

Tuesday 1st July 2014 Lords Chamber

Asked by

[Lord Kennedy of Southwark]

To ask Her Majesty’s Government what action they propose to take in respect of Wonga.com and other financial sector companies which have employed misleading debt collection practices.

[Lord Kennedy of Southwark (Lab)]

I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as a director of London Mutual Credit Union.

[Lord Newby (LD)]

My Lords, the Government are determined that abuse in the payday lending market should be tackled wherever it occurs. That is why we gave the Financial Conduct Authority strong powers to regulate the payday lending industry and legislated to require the FCA to introduce a cap on the cost of payday loans. The FCA asked Wonga to make redress to customers, which Wonga has agreed to. Wonga will pay compensation totalling more than £2.6 million to around 45,000 customers.

[Lord Kennedy of Southwark]

Will the Minister join me today in condemning the disgusting activities of Wonga.com? Will he arrange for me, faith groups and other campaigners to meet a Treasury Minister to look at the idea of putting the fines imposed on companies in the financial services sector into a separate fund and using them to support the credit union movement, financial charities that work with adults and children, and similar organisations? Enabling people to make better-informed financial choices and to understand their options is a much better way forward.

[Lord Newby]

My Lords, I agree with the noble Lord on his first point and I am happy to arrange a meeting. I remind the House that the Government are putting £38 million into the credit union expansion plan and we strongly support the expansion of credit unions.