PLANS to limit the cost of payday loans has been welcomed by political groups in Northumberland.
The Financial Conduct Authority (FCA), which takes over regulation of the sector in April, already has the power to cap the cost of this type of borrowing.
But in an amendment to the banking reform bill going through Parliament, Chancellor George Osborne has put a duty on the FCA to use those powers to impose a cap.
Northumberland Conservatives lobbied the chancellor after raising concerns about the high interest rates that payday firms charge their customers.
Group leader Peter Jackson said: “I am absolutely delighted that the Chancellor has listened to the views from Northumberland.
“The payday lenders have been very active in Northumberland, praying on some of the most vulnerable people in our communities. It is good to know that the Government listened to our concerns and swift action has been taken on this important issue.”
“The personal cost to some people as a result of these expensive payday loans cannot be measured but it should not be ignored or swept under the carpet. As well as this new regulation, Northumberland Conservatives are keen to support moves to increase competition in the banking sector through the creation of Local Banks, through more competition in banking, through the promotion of our successful Credit Unions and through giving free access to money advice services.”
Earlier this year, the county council blocked access to payday loan websites on all its computers following a motion put forward by Labour councillor Laura Pidcock.
Leader of the authority’s Labour administration, Grant Davey, said: “It’s a welcome move by the chancellor and I’m pleased that pressure from Labour councils around the country that put down motions to tackle the scourge of payday lenders has worked.”
Coun Pidcock said: “When people need money quick, applying for a pay day loan is sometimes the only option for people in a desperate situation.
“As cuts from the national Government are impacting disproportionately on those who have the least, people are having to accept extremely high interest rates with often crushing consequences. As a council we have to do all that we can to protect people in Northumberland from these pay day lenders.
“The Labour group is pleased that the motion was passed with such ease, but we know that we also need to be proactive in supporting credit unions, we need to try and shield the national cuts from the most disadvantaged and promote access to money and debt advice.”