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Murphy urges caution on ‘Pay Day Loans’

12 December, 2011 - by Westminster

Sinn Féin Economy Spokesperson, Conor Murphy MP, MLA (Newry/Armagh) speaking in advance ofan Assembly Motion expressing concern at the increase in the numbers of lenders offering ‘Pay Day Loans’ said:

"These lenders are literally cashing in on the dire economic straits that many people find themselves in, 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’. 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 over 200% it is nothing short of loan sharking.

“But in the absence of the Assembly having power over our economy there is little action that we can take against such practices. In the absence of such powers being available to the Assembly I will be urging my colleagues and the Consumer Council to look into the issue of 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.

“Although the motion before the Assembly specifies the recent emergence of so-called ‘Pay Day Loans’ 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 arrangements to read the small print to ascertain the level of interest and ramifications if you default.

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