I want to drive payday firms off high street

Mr Austin has described the lending interest rates offered by the firms a 'complete disgrace' and is urging people in debt to stay clear of using them.

Yesterday Mr Austin, along with Walthamstow MP and payday loan campaigner Stella Creasy, handed out leaflets and spoke to shoppers in Dudley, which has six such shops in the town centre.

His campaign comes after an investigation by the Office of Fair Trading uncovered evidence of widespread irresponsible lending across the industry, with some told to improve their practice or risk losing their licence.

Mr Austin accused payday loan firms of 'preying on families struggling to put food on their table.'

"I want to drive the payday loan shops out of Dudley High Street," he said.

"The growth of payday loans shops is an absolute disgrace. The companies are headed by wealthy people who are getting richer and richer on the back of people in this town finding it hard to cope under financial pressure.

"The interest rates they offer are a complete disgrace and they end up trapping people into months and months of payments which ends with them laden with thousands of pounds of debt."

Mr Austin said he had spoken to people in the town who had taken out a £100 loan, and ended up with a £1,700 debt to pay two years later. These people, he said, were unable to afford each repayment, so would take out further loans, to meet the needs of the loan companies.

Mr Austin is supporting a campaign by Miss Creasy to force through Government legislation which would mean the payday loan firms would have to cap the cost put on the lender and increase credit checks before providing cash.

Miss Creasy said: "80 per cent of people take out a payday loan for essential needs – but the companies are taking advantage of them for this."

Mr Austin also used the leaflet drop yesterday to encourage the use of 'responsible' lenders such as Castle & Crystal Credit Union. The not-for-profit organisation provides loans on interest rates governed by law, and has a base in Dudley town centre.

In response to the MPs' action, payday lenders in the town defended themselves.

Tracy Wilkinson is manager of Cheque Centre, in High Street. She receives between three and 10 quick loan enquiries a day, but provides cash to only a third following checks on the applicant's financial ingoing and outgoings.

She said: "We don't force people to borrow money from us. We fully explain the terms and conditions, and continually check them over with the customer. We make sure we comply with all regulations and have made several changes recently."