Will clause 22 of the Financial Services Bill calm the perfect storm?

The “perfect storm” is one of Ms Stella Creasy’s phrases that has been bandied out quite a bit of late by the Labour MP for Walthamstow in what has become a personal crusade against what she sees as “toxic” short term loans companies.

The perfect storm, more precisely, is the combination of rising unemployment, rising basic costs and frozen wages for some in Britain as the depressed state of the economy and government cut backs continue to bite.

Ms Creasy thinks that this combination creates the ideal environment for short term loans providers who provide instant cash loans and short term loans to the people who find it hard to struggle from one payday to another.

Ms Creasy was one of the speakers at a debate at St Paul’s Cathedral in London recently that focused on what “mission driven” investors could do for the low paid.

She said that it was completely legal in Britain for some companies to charge thousands of percent interest rates, while this was not the case in many other parts of the world where exorbitant interest rates were illegal.

She said that many of the low paid or the unemployed were being sucked into a long term and vicious cycle of increasing debt that was fuelled by their dependence on high interest loans from short term loans lenders and the like.

Creasy said that one of the main things that anybody who was interested in ethical finance and the fate of the low paid could do was to lobby their MP in preparation for the upcoming reading of the Financial Services Bill in Parliament.

The Bill is expected to be addressed on Monday 21st April and will prepare the ground for the new alternative to the Finance Services Authority. The FSA is the country’s former financial watchdog, which is about to die and become reborn as the Financial Conduct Authority.

The amendments to the Bill which have been submitted by some MPs like Ms Creasy as a means of providing a way of controlling companies that provide antisocial finance options.

Ms Creasy’s amendment that she has submitted is to clause 22 and is intended to cap the interest rates that short term loans companies charge.

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