Weekly payday roundup: 7 days ended 27 Sept 2012:
Bit of news this week: a councilor from Haringey has had it with payday lenders, calling on the government to cap interest rates.
Councillor Joe Goldberg has said that enough is enough when it comes to dealing with payday advance lenders that are little more than legalised loan sharks. The Labour councilor has demanded that the government rethink its refusal to institute an interest rate cap on these short term loans, especially with next year’s changes to both benefits and taxes running the risk of more Brits needing to turn to payday lenders when they run short of cash before their next pay period.
Around 36,000 of the lowest income earners in Haringey will face around £220 more in council tax from April of next year, according to the Haringey Labour Group. The increase comes as a result of the Government cutting its council tax benefit, and Cllr Goldberg is convinced that the extra burden will lead to even more people having to take out instant cash loans every month – a serious problem in a borough where an estimated 15,000 households had to rely on payday lenders in 2011.
The government simply must institute an interest rate cap, Cllr Goldberg insists, as the lack of any current sort of regulation on payday lenders has interest rates as high as 4,000 per cent APR in some cases. There are thousands of households in Haringey facing tax rises and benefit cuts from April of next year, the councilor said, which raises a very real threat that even more people will end up having no choice but to be exploited by the payday lending industry, and if the government refuses to rethink it decision to cut council tax benefit for the UK’s lowest income earners, refusing to do anything to cap the interest rates these predatory lenders charge their captive customers will nearly certainly make matters that much worse.
Cllr Goldberg says the council is doing its part in preventing the spread of high street cash shops and to promote credit unions as safer alternatives. However, without support from the government, there is only so much the local authority can truly do.