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.
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.

To have your photo next to your comment please signup your email address with Gravatar.

Your email is never published. Required fields are marked *

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

Advert



Recent Comments

  • User AvatarJonathan Ferguson 4th May - 12:00am
    Thank you everyone for your comments. I will think carefully before providing more responses. It is late at night, but I will try to answer...
  • User AvatarLorenzo Cherin 3rd May - 11:50pm
    Jonathan You are welcome to your views , but as someone also very welcoming of newer members even I , from the view of wanting...
  • User AvatarLorenzo Cherin 3rd May - 11:36pm
    Vote Labour in any election, in the state theyre in now, if you do not care about giving your support to the worst opposition party...
  • User AvatarLorenzo Cherin 3rd May - 11:24pm
    Lord Tyler I regularly say to anyone listening , in the absence of a reformed House , the one we have with the right people...
  • User AvatarSimon Shaw 3rd May - 11:18pm
    @SILVIO "the Lib Dems are fighting tooth and nail for 4th 5th place" You keep saying this, but in doing so only display your ignorance....
  • User AvatarDavid Raw 3rd May - 9:10pm
    Thanks to dear Jeremy Hunt, up here in Scotland we're having to deal with queues of junior doctors at Gretna and Berwick.... they also say...