Midlothian MSPs Colin Beattie and Christine Grahame have backed calls from a national debt advice charity for the Financial Conduct Authority to look at tightening the regulations around the payday loan market.
The call made today after a report published by StepChange Debt Charity, the UK’s largest debt advice charity, found that regulations had “not fixed” the payday lending market, with some payday loan providers still not engaging in best practise.
Last year, 9.5% of those who contacted StepChange Debt Charity from Midlothian had a payday loan debt, with their average payday debt balance at £1,136. Although the charity has reported less and less people seeking help with payday debt, those who are turning to payday do not always get a fair deal.
Colin Beattie, MSP for Midlothian North and Musselburgh, commented:
“These statistics are a clear indication that regulations must be improved. While I’m pleased to hear that fewer people have been seeking help with their payday debt, we should ensure that those who use payday loans are treated fairly.
“Falling into short-term debt can happen to anyone at any time. In these times it’s very difficult to predict what might happen to impact on our finances in the near future.
“I call on the Westminster Government to look again at regulation of payday lenders and ensure that best practice is adhered to.”
Christine Grahame, MSP for Midlothian South, Tweeddale and Lauderdale, stated:
“With the UK Government’s callous cap on benefits which it is projected will affect some 55,000 households in Scotland, many of them in Midlothian, who may lose up to £115 per week in income.
“This can only drive desperate people into the arms of payday lenders so at the very least, tight regulation must be introduced without delay so that the poverty inflicted by these cuts is not compounded by borrowing at extortionate rates.”
Stepchange Debt Charity Scotland’s Public Affairs Officer James Stewart said:
“Regulation can make a significant difference to broken markets and FCA action over the last few years has gone some way to fixing the worst excesses of payday lending, but there is clearly still work to be done.
“Poor lending practices and the poor treatment of people in financial difficulty have serious consequences. They trap people in a cycle of repeated borrowing and as their balances continue to mount, so does the stress and anxiety that comes with severe problem debt.
“It is essential that the FCA review of the payday lending cap is broad enough to fix areas of consumer detriment and poor lending practices. There is also a clear and immediate need for the Government to examine more affordable forms of borrowing for financially vulnerable people, who are often left with nowhere else to turn in their hour of need.
“Debt really can happen to anyone, so that’s why it’s important for the public to know that there are free debt advice organisations out there like StepChange Debt Charity who can help.
“If you are borrowing to cover your household bills, or stuck in a cycle of minimum payments, the time to act is now.”