SDLP Foyle MP Mark Durkan has heavily criticised payday loan companies for pushing vulnerable people in Derry into debt by charging annual interest rates of up to 4,000 percent per year.
Mr. Durkan said that the 12-week deadline for payday lenders submitting evidence to the Office of Fair Trading (OFT) addressing failings in the sector has now passed, and is calling on the OFT to take immediate action to ensure irresponsible payday lenders are stopped from trading.
“I am deeply concerned by the OFT’s finding that there is currently widespread irresponsible lendingwhich has seen payday loan companies charging annual interest rates of up to 4,000 per cent per year.
“I have joined other MPs in calling on the OFT to take immediate action to make sure irresponsible and exploitative payday lenders are stopped from trading.
“I am also calling on the government to adopt a range of product interventions to limit the damage caused by unaffordable payday loans.
“This kind of lending – where greedy and unscrupulous loan companies prey on the financially excluded by offering easy credit at extortionate rates – has tipped so many people in Derry and throughout the North into inescapable cycles of debt and poverty.
“Whilst home-credit agencies, moneylenders and loan sharks are not a new phenomenon, in the current economic downturn they have become more prevalent, more pernicious and more profitable.
“I have therefore sponsored motions at Westminster, spoken during Commons debates and have lent my full support to campaigns urging the government to introduce a legal cap on the amount of interest that can be charged by payday loan companies.
“It is only right that immediate steps are taken by both the OFT and the government to protect some of the poorest borrowers in society, rather than allow them to be exploited.”
Payday loan companies have also attracted attention for unscrupulous lending and over-aggressive debt recovery practices from borrowers who default.
In one recent case, a woman who missed a direct debit of £100 on a payday loan found that they then took the full outstanding loan out of her account, debiting her an unexpected £680 in one fell swoop.