Christina McKelvie MSP has backed calls from a national debt advice charity for the Financial Conduct Authority to look at tightening the regulations around the payday loan market.
The call made today after a report published by StepChange Debt Charity, the UK’s largest debt advice charity, found that regulations had “not fixed” the payday lending market, with some payday loan providers still not engaging in best practice.
Last year, 15.5% of those who contacted StepChange Debt Charity from Hamilton, Larkhall and Stonehouse had a payday loan debt, with their average payday debt balance at £1,092.47. Although the charity has reported less and fewer people seeking help with payday debt, those who are turning to payday loans do not always get a fair deal.
Commenting, Christina McKelvie MSP said:
“I’m grateful to Stepchange for highlighting that, despite regulation to tackle payday lending, more work still must be done.
“People can find themselves in debt for a variety of reasons; it can happen to anyone at any time. However, debt should not equal exploitation and for a lot of people turning to payday loan lenders, that’s exactly what is happening – exploitation.
“That exploitation is limited and fears allayed thanks to the work from Stepchange - a free, impartial service that can help you when you need it most.
Stepchange Debt Charity Scotland’s Public Affairs Officer James Stewart said:
“Regulation can make a significant difference to broken markets and FCA action over the last few years has gone some way to fixing the worst excesses of payday lending, but there is clearly still work to be done.
“Poor lending practices and the poor treatment of people in financial difficulty have serious consequences. They trap people in a cycle of repeated borrowing and as their balances continue to mount, so does the stress and anxiety that comes with severe problem debt.
“It is essential that the FCA review of the payday lending cap is broad enough to fix areas of consumer detriment and poor lending practices. There is also a clear and immediate need for the Government to examine more affordable forms of borrowing for financially vulnerable people, who are often left with nowhere else to turn in their hour of need.
“Debt really can happen to anyone, so that’s why it’s important for the public to know that there are free debt advice organisations out there like StepChange Debt Charity who can help.
“If you are borrowing to cover your household bills, or stuck in a cycle of minimum payments, the time to act is now.”