Cross-party agreement on tackling legal loan sharks

Stop legal loan sharks

There was strong cross party support on the issue of tackling “Legal Loan Sharks” raised by Medway Labour at the Full Council Meeting on Thursday.

In moving the motion Cllr Vince Maple highlighted the rapid increase in value of the payday loans industry from £100 million in 2004 to £1.7 billion in 2010. This growing industry is having a negative impact on Medway families. The levels of interest charged by some of these providers is above 4000% APR.

He also raised concerns regarding some of the very targeted advertising used by loan companies, who target members of the armed forces, students and those receiving tax credits and child benefit.

Cllr Vince Maple, Deputy Leader of the Labour Group said,

“I am pleased we have found cross party consensus on this important issue.  I hope through the cross party task group we can find ways to effectively lobby the government to make changes called for – to ensure Medway residents have protection from the legal loan sharks”

Another important element of the motion is improving financial literacy and promoting Credit Unions.

 Cllr Maple added,

“As well as highlighting the predatory lenders, it is vital to offer alternative financial provision through  Credit Unions like Medway Credit Union or Kent Savers. They are safe, covered by financial regulators and offer genuinely community based financial services. It is also about making sure there is financial literacy education available, working with local organisation like the Citizens Advice Bureau”

To show credit unions are for people with all levels of income, Cllr Maple highlighted during the debate the example that Hollywood actor George Clooney is a member of a credit union.

Notes:

Wider information on the issue can be found on website of Stella Creasy, Labour MP who has been leading the campaign in Parliament: http://www.workingforwalthamstow.org.uk/?p=621

The motion agreed at full council:

This Council:

• Welcomes the UK-wide cross party campaign to end ‘legal loan sharking’.
• Believes that the lack of access to affordable credit is socially and economically damaging. Unaffordable credit is causing a myriad of unwanted effects such as poorer diets, colder homes, rent, council tax and utility arrears, depression (which impacts on job seeking behaviour) and poor health.
• Further notes that unaffordable credit is extracting wealth from most communities.
• Believes it is the responsibility of central government through legislation to ensure access to affordable credit.
• Agrees that the issue of debt and affordable credit is an important and complex issue and is causing stress and anxiety to many families in Medway.

This Council therefore:

• Resolves for this issue to be referred to a cross-party task group of Overview and Scrutiny as a priority. This will enable the Council to consider all the implications, form a better understanding of the role the Council can play in supporting our residents and develop a clear policy.
• In particular it recommends that the task group considers how the Council can lobby the government to strengthen the rules governing the issue of lending licences and address the lack of affordable credit and how the Council can promote financial literacy and affordable lending.
• Pledges to promote credit unions in Medway, as community based organisations offering access to affordable credit and promoting saving.