Council Leader urges UK Government to give councils new powers over payday loan companies
The Leader of Renfrewshire Council has written to the UK Government to urge that councils be given new powers to regulate payday loan companies.
Councillor Mark Macmillan has asked the Secretary of State for Business, Innovation and Skills to give councils powers as part of their licensing remit, so that payday loan companies would have to apply to local authorities to set up in the area.
Councillor Macmillan said: “The Office of Fair Trading has referred the issue of payday loan companies to the Competition Commission to address some serious concerns at national level and responsibility for monitoring such lending companies will pass to the Financial Conduct Authority in April 2014. So some progress is being made.
“But much more needs to be done at local level – and done now – to stop communities falling victim to these companies that fail to check if customers can afford the repayments, and then hound them with aggressive tactics when they can’t pay back the loan.
“It’s scandalous that at the moment these companies can simply move into areas where there are vulnerable people already struggling financially, with no questions asked. Too many families have fallen into a vicious circle of toxic debt after being caught in the payday loan trap of anything up to 4,000 per cent interest.
“I’d urge the UK Government to do the right thing and give councils the local regulation that’s desperately needed over these companies’ ongoing attempts to suck money out of low-income communities.”
The Civic Government (Scotland) Act 1982 already allows councils to regulate several types of business where it’s in the public interest including taxis, second hand dealers and street traders.
Councillor Macmillan’s letter to Secretary of State, Vince Cable MP, is calling for the scope of the Civic Government Act to be widened to include payday lenders, or that an alternative regulatory scheme be established.
Renfrewshire Council has banned access to pay day loan websites from its own PCs including computers in libraries and community facilities.
The council has also created a 45-strong team to help people who are facing difficulties as a result of benefit cuts. Residents who are struggling with debt or who are worried about benefit cuts should call 0300 300 0288.