Sunday, 13 April 2008

Stop the Payday Lending Scandal - Write to your M.P

We have now created an easy way for you to e-mail your M.P asking them to support Early Day Motion 1280 - Affordable Credit, which David Drew M.P has tabled. The whole process takes only two minutes of your time!

We need as many people as possible to participate. To help, click here

Many thanks

Debt on our Doorstep

Saturday, 12 April 2008

Darling urges action on mortgages - but no proposals yet

Alistair Darling today called on banks to recent cuts in the UK's bank base rate to mortgage borrowers. Speaking in Washington, where the Chancellor is attending an international summit of finance ministers, he called for banks to do "everything possible" to help borrowers struggling with mortgage repayments, and promised that Government would play its part with "nothing ruled out". However, there is an absence of specific policy proposals at this stage.

Darling's statement comes on the heels of a warning from the Council of Mortgage Lenders that lending could be reduced by as much as 50% this year. The lack of credit available is now an urgent matter which needs to be addressed. The injections of capital from central banks, including the Bank of England, have virtually matched the scale of losses suffered by banks since the financial crisis surfaced at approximately £420 billion. Yet these funds are simply not being passed on by banks to households. Instead, banks are now hoarding these cheap funds. Banks are also now hiking up their lending rates to those remaining households that they consider good risks in order to recoup some of their losses.

Two specific policies need to be adopted to ensure households are helped to manage the impacts from this crisis going forwards.
  • Firstly, any further access to cheap funds from the Bank of England must be made contingent on the submission of a satisfactory plan to improve access to affordable credit for households. Specific conditions should be attached to Bank of England funds which could include requirement for banks to inject the funds into the mortgage market or that they be used to support households needing to reschedule their existing commitments. Critically, conditions must be placed on banks to limit the cost of future mortgages and loans and that limits be clearly linked to the Bank of England base rates (expressed as bank base rate + x%).

  • Secondly, Government, the Bank of England, and the FSA should develop a joint plan for ensuring access to affordable credit in the UK. Changes should be made to the licensing conditions for banks so that they are required to demonstrate how their bank serves the needs of low income households and how it is contributing to the overall target. Banks should be publicly rated on their achievement and the regulator empowered to take action where performance is unsatisfactory.

Friday, 4 April 2008

Parliamentary Support for Payday Investigation Gathers Pace

Parliamentary support for an investigation into the growth of payday lending, and other forms of extortionate borrowing, is gathering pace. David Drew's Early Day Motion, supported by Debt on our Doorstep has already attracted the support of 29 M.P's within only three days.

The Early Day Motion - number 1280 reads as follows:

That this House notes that the global credit crunch is now impacting on the ability of UK consumers to obtain access to affordable credit; notes that high cost and irresponsible forms of lending such as pay day lending, which charges in excess of 1,000 per cent. APR and traps people on lower incomes in a cycle of credit dependency, are now expanding rapidly as a result; further notes that Dollar Financial, one such US pay day lender, now has over 200 Moneyshop stores providing these loans in the UK; regards this development as extremely worrying for the Government's ambition to eradicate child poverty; and urges the Treasury, the Department for Business and Regulatory Reform, the Office of Fair Trading and the Financial Services Authority to conduct a joint inquiry into the growth of high cost lending, including pay day loans, in order to inform future regulatory action against irresponsible and high cost lenders and to contribute to the Government's aim of ensuring greater access to affordable credit.

You can view the signatories to the motion here.