LibLink: Jo Swinson on payday loans and meeting the Archbishop today

jo swinson by paul walterYesterday Jo Swinson spoke about payday loans on camera to The International Business Times. We cannot embed the video on Lib Dem Voice, but you can watch it here.

She said that she and Vince Cable would be meeting the Archbishop of Canterbury, Rev Justin Welby, today to discuss  new  guidelines for credit unions. She stated:

My colleague and I, business secretary Vince Cable, are meeting the Archbishop of Canterbury on this issue. We are very keen that credit unions are expanded as they are important way of lending to a community that benefits local people.

The government has already committed £38m to help credit unions modernise and some of the challenges they face, by going up against the likes of paydaylenders, include infrastructure issues.

In June, the Archbishop gave a significant speech in the Lords, in which he called for flexibility in the regulations in order to permit churches and other organisations to set up and promote credit unions to serve local communities.

* Mary Reid is the Monday Editor on Lib Dem Voice.

Read more by or more about , , , or .
This entry was posted in News.
Bookmark the web address for this page or use the short url http://ldv.org.uk/35654 for Twitter and emails.
Advert

3 Comments

  • Martin Caffrey 9th Aug '13 - 1:52am

    This government is making lots of people use paydaylenders as a last resort due to the Bedroom Tax. Yes, I said TAX. Live with it.

    Actually, when will you release figures showing how much money has been saved? I’m betting it will have cost more. D’OH!

  • Matthew Huntbach 12th Aug '13 - 11:36pm

    I’m sorry, I appreciate the problem of the short-term loan companies, but I find the suggestion from the Archbishop that credit unions could replace them to be silly.

    Credit unions are simply not equipped with the finance and organisation to make large numbers of short term loans. The short term loan companies work on the basis that they charge huge interest rates to balance the fact they are lending to people with poor financial records and prospects who have a very high probability of defaulting. If you are in the business of making loans to people who are highly likely to default, you do need to put a lot of effort into pushing those you’ve lent money to to pay it back. You need lawyers and an army of debt collectors, and an army of people doing the research to track down the defaulters. Credit unions don’t have this, and it would wreck their image if they did. By the very nature of credit unions, they have to be cautious lenders.

    The huge supposed “fees”, which standard banks charge if you go over your credit limit for a day or similar, are even more usurious than the short-term loan companies when you look at how much is paid for how much real “lending”. Years ago I had the experience of someone I’d written a postdated cheque to, who PROMISED me they’d wait to put it in, “accidentally” (so they said) put it in earlier, resulting in a whole series of other things bouncing, and bank costs of several hundreds, leading to more problems and bank costs later on – took me YEARS to recover. Well, I’d rate pay 1% a day to Wonga than experience that again.

    I think there is a role for short-term lenders where the interest rates look high, but it’s a real reflection of the risks and admin costs involved. Where it becomes evil is when the interest rate accumulates, which very easily happens when someone desperate has taken out a short term loan, hoping they could pay it back quickly, but found they can’t – maybe someone on a zero-hours contract, who thought they’d get called in to some work soon but didn’t. So it seems to me the best way to control this is to have a cap which stops compound interest building up to ridiculous levels, but which allows short term charges to be applied up till that.

  • The main reason why credit unions are reluctant to make short term loans is that their are limited by law in the rate of interest which they can charge. This is sufficient to allow them to cover the administrative costs of longer term loans but not small short term loans. If this requirement were relaxed the credit unions would be able to compete with pay day lenders and, because of their simple operating model, at much lower rates than Provident or Wonga.

Post a Comment

Lib Dem Voice welcomes comments from everyone but we ask you to be polite, to be on topic and to be who you say you are. You can read our comments policy in full here. Please respect it and all readers of the site.

If you are a member of the party, you can have the Lib Dem Logo appear next to your comments to show this. You must be registered for our forum and can then login on this public site with the same username and password.

Your email is never published. Required fields are marked *

*
*
Please complete the name of this site, Liberal Democrat ...?

Advert



Recent Comments

  • User AvatarTomas Howard-Jones 8th Jul - 12:48am
    John Tilley is right- the motivations and understanding of Islamic State ultimately are the same intellectual stable as that from the Saudi- Wahabist grip on...
  • User AvatarTonyJ 8th Jul - 12:34am
    This is a great speech. Really. I love it. And I hate to criticise any of it. But... "Close your eyes and think of England...
  • User AvatarTomas Howard-Jones 8th Jul - 12:29am
    Rest assured at least that the catastrophic situation in Syria and growth of "Islamic State" would undoubtedly have been far, far worse, if the British...
  • User AvatarAndrew 8th Jul - 12:16am
    We can't ignore the EU referendum - it is going to dominate the news fotr months and is the biggest single issue facing the country...
  • User Avatarnigel hunter 8th Jul - 12:13am
    This article is so relevant it should find its way to the national press,
  • User AvatarPhilip Vial 7th Jul - 10:42pm
    The problem was never that the Lib Dems didn't do anything good in the last Government. The problem was that they rolled over on tuition...
Wed 8th Jul 2015
Thu 9th Jul 2015
Fri 10th Jul 2015
Sat 11th Jul 2015
Sun 12th Jul 2015
Thu 16th Jul 2015
Sat 18th Jul 2015
Sun 19th Jul 2015
Mon 20th Jul 2015
Thu 23rd Jul 2015
Sat 25th Jul 2015
Sun 26th Jul 2015
Mon 27th Jul 2015
Thu 30th Jul 2015
Sat 1st Aug 2015