Lord Sugar
Main Page: Lord Sugar (Crossbench - Life peer)
Baroness Wilcox
My Lords, many of us have seen on television these advertisements by payday loan and instant loan companies offering loans at what seem to be huge rates of interest, running into thousands of per cent. This is a complicated market. The APRs may not be the most suitable method for measuring the cost of these products. For example, borrowing £100 for five days from a company attracts an APR of 3,253 per cent, as the noble Baroness said. That sounds an enormous amount, but in fact the borrower will pay a total of £111—just £11 for borrowing £100—which is less alarming than the APR might suggest. However, that said, we are always looking for ways to try to make credit and lending available to people at all levels in our society. I know that the previous Government and the Government before them struggled with whether to cap lending or let it run free. It has always been the policy of the previous Government, the Conservative Government before them and consumer groups that at least if people have access to some form of credit, they are not being forced on to the black market and loan sharks.
Lord Sugar
My Lords, does the noble Baroness agree that this type of advertising for these loans is rather misleading and that the Government should step in to regulate the content of the adverts, insisting that a significant proportion of them—on TV and in newspapers—is allocated to spelling out what consumers are letting themselves in for? I pre-empt the noble Baroness’s answer by saying that this is not a matter for the Advertising Standards Authority or the trading standards people. Can we also consider a 30-day cooling-off period when the consumer can change their mind at no penalty to them?
Baroness Wilcox
My Lords, I thank the noble Lord for that question and for actually giving part of the answer. The line to take on this is that advertisements for high-cost credit, such as those for instant loans, should carry a wealth warning. We are looking at that interesting idea. The Office of Fair Trading has just made a report which we will be looking at to find a way forward on all of this. This issue affects all of us and it does not matter which side of this House we are on. We all understand the idea that people have to have access to some form of lending and credit, but I can quite understand that seeing these advertisements on the television has upset an awful lot of people, who think that it sounds far too easy. We are and will be looking at ways to see if we can make clearer the information that the general public get, in a language that they can understand.