BURGESS DEMANDS ACTION ON PAYDAY LOANS
Published 19 Jan 2012 09:30
IRVINE MSP Margaret Burgess has demanded immediate action by the UK Government on high-interest payday loan companies, who often charge interest rates of around 4000%.
The local MSP who previously worked as a Citizens Advice Bureau manager was leading in a member's debate in the Scottish Parliament on her motion on the damage done by payday loan companies in local communities and across Scotland.
She had previously received cross-party support for her motion.
She explained payday lending as "a form of credit whereby the borrower gives the lender authorisation to make an automatic withdrawal from their bank account as security for a supposedly short-term loan, which has to be repaid in full, plus interest, on the borrower's next pay day. Iit looks like an easy way to access money.
"The problem is that the original loan just keeps getting rolled over again and again and the interest and costs just keep increasing. People are forced into taking out a further loan from another high street lender as they get deeper and deeper into debt.
""We all know these companies are targeting the vulnerable and low paid.In my view, that is usury and exploitation..
"The advice to people thinking of a pay day loan is this: do not take it out.
"We cannot allow people to be trapped in a system that offers them little protection and inadequate access to affordable credit.
"Regulation is needed and it is needed now.
"We need to protect financially vulnerable people from this type of high-interest borrowing and unmanageable debt, while at the same time ensuring that they have access to good money advice and affordable credit.
The MSP held up local credit unions as an excellent source of financial advice and support:
"I give the example of the 1st Alliance (Ayrshire) Credit Union in my constituency which, like other credit unions, encourages saving and offers a range of services including current accounts, bill paying, low-cost credit and emergency loans.
"It also works innovatively with the local authority and money advice services in tackling rent and mortgage arrears, thus preventing eviction and homelessness.
"That is genuine financial support, which we should support and promote."
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