MP Blasts Rates On Loans And Credit Card

Wed, 12 Nov 2008

A Labour MP has called for a limit to be set on interest rates on loans, credit cards and store cards as people in financial difficulty are being targeted by companies offering penalty charges.

Speaking to the Commons today, Livingston MP Jim Devine called for legislation to cap interest rates on loans to a "fair" level of 5 per cent above the Bank of England base rate, although he added the issue should be put out to debate.

He commented: "I have been shocked at the interest rates charged by stores and legalised money lenders . Stores like Burtons, Dorothy Perkins and Woolworths all charge 29.9 per cent, while an Argos payment card has an interest rate that can rise up to 220.7 per cent."

"Companies providing loans charge even more outrageous interest rates . Log Book Loans charge 437 per cent, Payday UK charge an eye watering 1350 per cent APR as does Early Payday Loan in Windsor."

"These rates are absolutely scandalous and at a time of the credit crunch it's time we crunched the credit charges," he continued.

But Devine added that high street banks, now part-owned by the public, are just as much to blame as store cards and payday lenders .

Devine welcomed a pledge by the Prime Minister Gordon Brown to bring lenders to Downing Street to discuss a "new responsible approach to lending " amid claims that some UK companies are exploiting the vulnerable by raising the cost of borrowing .

However, the Labour representative said more efforts could be made to combat irresponsible lending through legislation and the promotion of local credit unions .
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