Payday Loans

Debate between Lord Newby and Lord Selsdon

Wednesday 11th December 2013 Lords Chamber

[Lord Selsdon]

To ask Her Majesty’s Government what steps they are taking to regulate the issue of payday loans to those without a regular income.

[Lord Newby (LD)]

My Lords, the Government have made it clear that payday lenders should make loans only to those who can afford to pay them back. From April 2014, the Financial Conduct Authority will require lenders to undertake thorough affordability assessments to ensure that borrowers are able to make sustainable repayments. No later than January 2015, the FCA will cap the cost of payday loans so that borrowers in financial difficulty do not face spiralling debt.

[Lord Selsdon (Con)]

My Lords, I am most grateful to the Minister for his reply, but he has not actually given me the answer I needed because my skills at mathematical calculations are not great at the moment. If my noble friend wanted, for example, to take out a payday loan for £1,000 to cover him over the Recess, what would the rate of interest and repayment be over a matter of a few weeks?

[Lord Newby]

Almost certainly too high, my Lords.