Robert Halfon speak out over doorstep lenders

Politics / Sun 27th May 2018 pm31 04:00pm

MEASURES to clamp down on doorstep lending and rent-to-own schemes are expected to be unveiled this week following concerns that they are fuelling problem debt reports The Guardian.

The action comes after warnings that vulnerable people are at risk from the schemes, which have continued to flourish after a cap was placed on payday loans, popularised by lenders such as Wonga. The cap significantly reduced the cost to borrowers, but campaigners and regulators worry that people on low incomes are drawn into unsustainable debt by other types of lending.

These schemes include “rent-to-own” deals which see customers acquire items such as furnishings and electrical goods on credit, but end up paying interest of up to 1,557%, according to Citizens Advice. Doorstep lenders typically offer £100 to £1,000 directly to customers, then return to their homes every week to collect repayments.

It is understood that a clampdown is to be unveiled this week by the UK’s top financial watchdog, the Financial Conduct Authority (FCA). MPs from all parties have been pushing for the cap on payday lending to be extended to doorstep lenders and rent-to-own deals. Payday loan rates were capped at 0.8% per day of the amount borrowed, while no one pays back more than twice the amount they borrowed.

A major survey last year revealed that 3.1 million adults had one or more high-cost loans or had had one in the previous 12 months. People showing “characteristics of potential vulnerability” were twice as likely to have used high-cost credit as other UK adults. In 2016, 200,000 people took out a rent-to-own product and 400,000 had outstanding rent-to-own debt at the end of the year. Rent-to-own customers have annual incomes of around £16,100, which means they are not well-placed to deal with high-interest loans.

Doorstep lending customers, also known as “home-collected credit”, have annual incomes of about £15,500. Their total outstanding debt more than doubled from £1,200 in November 2014 to £2,800 in November 2016, with a quarter of this in home-collected credit. In 2016, 700,000 people took out a home-collected credit loan and 1.6 million people had outstanding debt on these products at the end of the year.

Rob Halfon, Tory MP for Harlow and former business minister, said he was concerned that “loan sharks and rent-to-own companies are getting their teeth into the most vulnerable”.

“It’s outrageous that some of them will end up paying back double what they borrowed,” he said. “Capping these interest rates would leave hardworking people in Harlow and across the country safe in the knowledge that they’ll get a fair deal when they take out a loan.

“The government has given the FCA the powers to bring in a cap to protect consumers from these companies. Now the FCA needs to side with consumers.”

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5 Comments for Robert Halfon speak out over doorstep lenders:

2018-05-27 16:33:28

Bob's missing the central issue once again and only treating the symptom rather than the cause. The very reason that people need payday loans and are at the mercy of loan sharks is because his government is one that punishes the poor with benefit cuts and is responsible for the lack of job security because they chased all the skilled jobs away as a side effect of their all out war on the trade unions. Bob is a past master at playing the weeping mourner over jobs and the cost and standard of living but it's all crocodile tears. How? Because he voted for the very things that make life difficult for the people he claims to want to help. I do hope he didn't sit near the window during last night's storm. He'd be liable to be struck by lightning with a neck containing that much brass.

2018-05-28 06:06:53

More lies from ? Live within your means and you will never need a pay day loan, simple really. Better still, get a job.

2018-05-28 12:51:20

The vast majority of people taking out payday loans are in work. Hence the term *payday* loan. Bit of a clue there, Columbo. Lies? Okay, let's ignore that since the government's apprenticeship levy was introduced, starts have been down 60%. Previous to that there was an average year on year increase of 47%. This is denying working class young people the chance of a skilled and better paid job. And let's forget that apart from Greece, the UK has the worst performing wage structure of all OECD countries. All this while in the last year, 14 more billionaires have been made in Britain, off the backs of poor stagnant wages for the people at the bottom, subject to the loan sharks and payday loans that Bob pretends to care about. Ignorance is bliss eh Micky.

2018-05-28 13:26:03

Sucker, most of the benefits brigade consider the hand-outs as wages, and actually use the term. We're still paying off labour's astronomical debts, and don't forget we have a culture of, don't work ,won't work with a lot of the youth. Quoting figures at everybody is ridiculous. Google everything to try to appear superior. Venezuela is a prime example of the marxists in-efficiency with finances. Not even toilet paper, yet corbyn and his gang think that is how we should be, and you reds think it's good. Live within one's means.

2018-05-28 14:54:59

Labour's "astronomical debts" as you call them come directly from saving the economy in 2008 from total collapse, a crisis which was the inevitable result of Thatcherism. The Tories borrowed more in five years than Labour did in 13. Really? How many benefits claimants have you personally heard use that term? Maybe you should stop reading the Daily Mail. Quoting figures, more like quoting facts and as usual with you Micky, the truth hurts.

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