High Cost Credit Bill
Debate between Ann McKechin and Lord Beamish
Ann McKechin (Glasgow North) (Lab)
It is a great pleasure to rise to support the Bill, and to commend my hon. Friend the Member for Sheffield Central (Paul Blomfield) for securing this Bill for debate and for the measured way in which he has sought cross-party support. I hope that the Government will use the opportunity of the Bill to allow us to take forward the sensible and measured approaches he has proposed.
Let us be in no doubt that we are here today because the regulatory controls in this country are weak and are failing to protect the most vulnerable in our communities. That is why the growth in the number of distressed borrowers is going through the roof. Despite the many warnings that came when the payday lending sector started to expand—the hon. Member for East Hampshire (Damian Hinds) explained this in great depth—we have allowed a wild west gold rush to happen in the high-cost credit sector. It is no wonder that so many major US players have been so keen to invest tens of millions of pounds to achieve a significant market presence here. In 2010, five of the seven biggest payday loan companies in this country were controlled by a US company. Interestingly, some of those companies also operate in Florida, which now has one of the most tightly regulated high-cost credit sectors in the world. It has no roll-overs whatsoever, but according to figures that I have received this week from Veritec Solutions, which provides the regulatory system operated in Florida, there has been a substantial increase, year on year, in the high-cost credit sector in Florida. What it does not have, however, is a substantial proportion of highly distressed borrowers. That is why this Bill is important in putting forward the message about controlling the number of distressed borrowers.
This week, the StepChange Debt Charity reported that more than 30,000 people have contacted it for help with payday loan problems in the first half of this year alone—that is a 54% increase on the figure for the previous six months and is almost the same as the total for the whole of 2012. The charity found that the average payday loan owed in my constituency was more than £1,500. So we are not just talking about £50 here or there; these debts are becoming a marked part of the lives of people in loan distress.
Mr Kevan Jones
Does my hon. Friend also have lenders in her constituency who will lend as little as £10 to certain individuals, at exorbitant rates of interest?