McLaughlin urges caution on ‘Pay Day Loans’
November 14, 2012
Sinn Féin Enterprise Committee Member, Maeve McLaughlin MLA (Foyle) has called on people feeling under financial pressure in advance of Christmas to resist the temptation to approach so-called ‘Pay Day Loan’ or 'Cash for Gold' companies.
Maeve McLaughlin said:
"These lenders are literally cashing in on the dire financial straits that many people find themselves, in the present economic climate. When these companies advertise loans to make ends meet until the next pay day most often they are targeting people on benefits who are not fortunate enough to have a next ‘Pay Day’ or those on minimum wage. Most of them are waiting on their next benefit cheque. I find this to be a form of exploitation of some of the most vulnerable in our society. At interest rates at times in excess of 200% it is nothing short of loan sharking.
“But in the absence of fiscal powers whereby the Assembly could regulate these lenders there is little action that we can take against such practices. In the absence of such powers being available to the Assembly I would urge the Consumer Council to look into the issue of exorbitant interest rates with a view to lobbying the Financial Services Authority to impose a cap on the rates that can be applied in these circumstances. I have no doubt that there would be 100% support from MLA's across all parties for such a lobbying exercise.
“So-called ‘Pay Day Loan’ and 'Cash for Gold' companies seem to be one of the few growth areas in the present depressed economic climate but there are other long established lenders out there who are also charging exorbitant interest rates of 190% and more.
"These companies are particularly active in the run in to the Christmas period when they know people are under financial pressure.
“I would strongly advise people in the absence of proper regulation of these opportunistic lenders to resist the temptation but if entering into any loan arrangement"