Payday Loan Companies

Cathy Jamieson Excerpts

Monday 20th January 2014 Commons Chamber

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

We have had a very thoughtful and interesting debate this evening, with 17 speakers in total as well as interventions. Most of the speakers seemed to reach a consensus on a way forward, although, as my hon. Friend the Member for East Lothian (Fiona O'Donnell) pointed out, the slight exception might be the hon. Member for Stratford-on-Avon (Nadhim Zahawi), who has just returned to his place. He tried his best to be consensual, but every now and again he was straining at the seams—[Interruption.] I hear someone say that he cannot help himself.

We heard an excellent speech introducing the report from my hon. Friend the Member for West Bromwich West (Mr Bailey), the Chair of the Select Committee on Business, Innovation and Skills. I know that we have had a number of debates on the issue and I wondered whether we would be able to reach consensus on the report this afternoon. That has happened and, as a number of hon. Members have said, this is an important time for such a debate, not least because the FCA is considering the responses to the consultation and will be publishing the rules shortly. It is also debt awareness week. I always feel that we should be concerned by debt awareness week—it is good for us and for the organisations that support people as it focuses our attention, but for many people the harsh reality of debt is something of which they are aware not just for one week of the year but every single day.

We have heard once again this evening examples of the cases with which we are all only too familiar that involve people in our constituencies. The Chair of the Select Committee highlighted a number of issues with advertising. He put it very powerfully when he talked about the suggestion that there could be a one-minute verification to decide whether someone could access such a loan. That highlighted why we need action on advertising.

My hon. Friend the Member for West Bromwich West also highlighted the impact of television advertising on children and young people aged 12 to 15. I have raised concerns about the issue in a previous debate, and about how advertising normalises payday loans and such borrowing. Someone might not normally consider such an option, but it can be instant and they can do it without thinking. I was also concerned to hear the story from a teacher about children’s awareness of the payday loan sector as one way of getting the things that one wants quickly. A strong case has been made this evening about advertising on television during daytime, early evening and children’s programmes.

My hon. Friend also made an important point in his opening speech about the need for the Advertising Standards Authority to work with the industry on a code of practice. If everyone were to come together to work on the matter and agree on how to take things forward, that would be excellent. If that does not happen, however, and if there is any delay, we should be prepared to ensure that action is taken.

My hon. Friends the Members for Glasgow North (Ann McKechin) and for Glasgow North East (Mr Bain) raised some of the particular concerns of the city of Glasgow. Let me take this opportunity to pay tribute to the new scheme introduced by Glasgow city council whereby pupils going to secondary school for the first time will be given the opportunity to have a credit union account, with £10 put into each account. That is one way of providing financial education while working creatively with the credit union movement in the city.

A number of Members stressed that it is now time for the FCA to act and various evidence was given from the CAB and StepChange about the level of debt. My hon. Friend the Member for Makerfield (Yvonne Fovargue) raised concerns that she has pursued for a long time now about the database and access to real-time information. A number of hon. Members talked about the Callcredit announcement and questioned whether it went far enough, as it does not necessarily provide real-time information on how decisions are made. That must be considered in more detail because, essentially, it is no good having information if it is not up to date.

As we have heard, indebtedness is not a new issue. As a former social worker, I well remember spending a lot of time trying to work with families who had to borrow money to pay for the basic necessities of life, without understanding the ongoing costs and how they would pay the money back. Of course, access to online systems and the “press the button, do it now” approach of the payday loan companies make it even easier to borrow now than in the days when the payday lenders of the time went around the doors and persuaded people to take out loans.

We heard some interesting comparisons with work that has been done in the US, Canada and Australia, particularly on roll-overs, and some good questions have been asked. For example, if someone cannot deal with one roll-over debt, why on earth would we want to let them have a second roll-over debt without that being challenged? We have heard concerns about the fact that payday originally meant payday. Of course, now it does not always relate only to people who are in work; many people on benefits and very low fixed incomes are also encouraged to take out these loans.

We have heard concerns about the continuous payment authority and people not understanding what they were getting into. We have heard a call for mainstream banking services to look more at how they support people on low incomes and the important point about financial education being about not only what happens in school but what happens particularly at key points in people’s adult lives, when there is an opportunity to intervene and to work with people to ensure that they understand what they are getting involved in.

A couple of hon. Members, including the hon. Member for Belfast East (Naomi Long), mentioned fraud. We heard from my hon. Friends the Members for City of Durham (Roberta Blackman-Woods) and for Rochdale (Simon Danczuk) about the implications of the planning system and the problems of payday loan companies opening shops in the high streets.

[Fiona O'Donnell]

Does my hon. Friend agree that, for her constituents and mine to be protected, we also need action from the Scottish Government, so that they use their powers to protect our constituents?

[Cathy Jamieson]

My hon. Friend makes an important point, but I do not have time to develop it now because I must now come to a conclusion.

I hope that the payday lending industry will understand the strength of feeling in this debate. To be fair, some Government Members said that they had come round to our way of thinking and are now prepared to back some of the actions that we have been calling for. The industry should look at that. The FCA should take note of the issues that have been raised this evening, and it should listen to the calls for action and the suggestion that it has perhaps not gone far enough.

I will finish by congratulating again the Business, Innovation and Skills Committee on the thorough work it has done on the issue and, indeed, all the campaigners who have brought it into the mainstream of opinion and concern, rather allowing it to be seen as something on the margins.