Labour group in call to discourage payday loans.
Labour councillors are calling for Walsall to become a ‘Wonga-free zone’ as families who paid for Christmas with short term loans now face massive interest rates and the prospect of deeper debt. Walsall council is to debate moves to help people access cheaper credit while calling on the government to restrict the payday loans companies’ demands and fees of those on low incomes.
Labour members on the authority are asking all local politicians to support their call to promote credit unions, which offer loans at affordable rates, and back a national campaign for greater controls on the booming ‘easy’ credit industry.
Labour group leader Tim Oliver, said Walsall’s mix of high unemployment and low average wages meant people were forced to take out loans; some of which charge interest of over 5000% per annum. “In the run up to Christmas many families have taken out short term loans which charge massive interests rates. If they fail to repay these on time they incur missed payment fees and some are encouraged to take out further loans over longer periods leading to spiraling debt. Christmas puts this in sharp relief, but throughout the year people are struggling with higher bills, such as heating and electricity, and the temptation to take out an ‘easy’ loan is very tempting.
“Even a small loan of £150 over 18 days works out to have an APR of over 5000%. We want to see Walsall become a Wonga-free zone where affordable credit is available by encouraging credit unions and other responsible lenders, while those with debt problems get the advice and assistance they need from organisations like the Citizens Advice Bureau.”
Labour members will move its notice of motion at Monday’s full council meeting as part of the Stop the Payday Loan Rip-Off Charter which calls on the Government’s Financial Conduct Authority to introduce tougher regulation of payday lenders.