John Battle MP Calls For Fair Loans Law

Speaking in yesterday’s House of Commons debate on the Consumer Credit Bill, John said, “We should introduce a responsible lending test for lenders so that the poor are not driven further into debt without protection. There should also be a reserve power to cap interest rates in future.

“Most importantly, we must put the Consumer Credit Bill on the statute book quickly so that people have redress and protection. Some individuals are enduring unsustainable debts and pay the highest price of all to borrow money for basics for their families. They should not be forced to live in financial misery for a single day longer.”

Mr Battle has campaigned for many years against unscrupulous lenders charging enormous rates of interest to poor people with nowhere else to go for credit.

He said, “Someone might need a pushchair or a carry-cot or extra provisions. If a relationship breaks down, a young mother might have to set up another home for her children and to buy a sofa, bed, cooker, fridge, curtains and carpets. Those are the financial shocks in the everyday world. A youngster changing school might need a new school uniform and extra clothing. Just a few hundred pounds is a financial shock to people managing on very low incomes.

“At first sight and under such pressure, a weekly repayment of £4.99 might look a good deal, but in reality weekly repayments to home loan companies, credit stores and cash-converter businesses involve a huge rack-up of compounding annual percentage interest rates and penalty charges which are sometimes hardly noticeable in the small print. Paying back £4.99 over 156 weeks can mean paying £432.38 to borrow the money. A person borrowing £1,000 will pay £700 interest. That is a massive rack-up and we should tackle that. The lending system is locking the poorest into long-term poverty which they cannot break out of.”

John welcomed the Bill and looks forward to working in Parliament to improve the details before passing it into law as soon as possible.

To see John’s speech in full click here

©John Battle MP 10 June 2005