Members of Islington Council have been forced to leave off their plans to ban instant cash loan providers from the borough, even as they lead successful protests against the instant cash loans industry.
Cllr Richard Greening, executive finance member, and Cllr Catherine West, Islington Council leader, were joined by two additional councillors in demonstrating not once but twice outside providers of no credit check short term loans in the region, including the Archway Mall’s Mall Cheque Agency. Both protests were organised by Islington Credit Union in order to raise awareness among the region’s consumers, warning them off from high interest rate payday lending.
However, legal problems have dismantled the plans of the council to do away with payday lenders through a by-law, even though the flagship fairness commission of the council recommended the action. The fairness commission’s chairman, Cllr Andy Hull, found it would be a legal impossibility to bring action against payday lenders, but instead moved forward with plans to support the protest in order to honor the spirit of the recommendations made by the fairness commission.
Payday lenders offer credit to consumers designed to act as a stop-gap measure for those found with financial difficulties in between pay periods. However, these loans all offer massive annual percentage rates of several hundred – or even several thousand – percentage points, with the example being 515.1 per cent charged by the Mall Cheque Agency.
In lieu of being able to ban payday lenders in the area, the council has chosen to promote the Islington Credit Union instead, as credit unions offer much less expensive rates to members who borrow from the credit union. Members share ownership in the union, and also run it, leading to much more equitable terms and conditions on their rates as a result, experts say.