Councillors to demand action on loan sharks
Councillors in Walsall will be asked to wage a war against payday lenders when they meet next week and sign up to charter demanding a tougher regulatory crackdown.
A notice of motion, which claims that payday lenders are trapping millions of people in spirals of debt, will be tabled by Councillors Tim Oliver, Keith Chambers, Sean Coughlan, Lee Jeavons, Fred Westley and Rose Burley during a meeting of the full council on Monday.
Lenders will be regulated from April by the Financial Conduct Authority (FCA) which has outlined new rules for the sector, including limiting the number of times a loan can be extended and how many attempts a lender can make to recover payments from a borrower's bank account. The notice of motion claims it is a step in the right direction but does not go far enough .
It reads: "The FCA's proposals would not prevent payday lenders from dripfeeding new loans to people who already have payday debts and are struggling to pay them back."
It also added: "The FCA's proposals would not prevent people from being hit with escalating penalty fees".
The council will be asked to support the Charter to Stop the Payday Loan Rip-Off which calls on the FCA to introduce tougher regulation of payday lenders. The charter has received support from MPs, debt campaigners and consumer groups.
Councillors will also be called upon to encourage residents to sign the online petition by Sheffield MP Paul Blomfield to support the Charter at www.change.org/paydayloancharter
It has already been signed by almost 4,000 people. The notice of motion also calls on the council to continue to promote and further support the development of local credit unions and more affordable lending and work with partners on campaigns against increasing levels of personal debt. If accepted, a copy of the agreement would be sent to Martin Wheatley, chief executive of the FCA, and to all local MPs.
Councillor Lee Jeavons, representative for the Birchills-Leamore ward, said: "It's very easy for people to think that it's a simple solution. They make it very easy to lend the money.
"I wonder whether people realise what they are getting into.
"There needs to be tougher regulations and more promotion of credit unions."
It emerged earlier this week that in neighbouring Wolverhampton taxpayer funded crisis loans are being given to people through a credit union.
Wolverhampton City Council has given £62,550 to Wolverhampton City Credit Union. Of that, £50,000 is being made available as emergency loans worth up to £100 each, with the rest going on administrative costs.
Campaigns have been run to stop the spread of payday lenders on the high street.
In Dudley, MP Ian Austin has been running a campaign against them.
The growth of payday lenders, such as Wonga, QuickQuid and others, has become such a concern that Wolverhampton, Dudley and Sandwell councils have all blocked access to payday lending websites from computers in libraries or other public buildings.
