Edward Davey MP, parliamentary under-secretary of state at the Department of Business, Innovation and Skills (BIS), addressed parliament this week on the government’s response to the consumer credit aspects of the consumer credit and personal insolvency review. The government is to investigate the impact of a variable interest rate cap for the high-cost credit industry.
He said a cap on store or credit cards would not be in the best interest of consumers as pricing some consumers out of the market could force individuals to seek unregulated or high-cost credit.
However, Davey says it is clear from the review that there are concerns around the high-cost credit market and the impact that using this type of credit can have on vulnerable consumers. As a result the government has appointed Bristol University’s Personal Finance Research Centre (PFRC) to carry out research into the impact of introducing a variable cap on the total cost of high-cost credit that can be charged in the short to medium-term high-cost credit market.
Davey says the government has also started negotiations with the industry to introduce improved consumer protections in codes of practice for payday lenders and other instant credit providers and is working to improve access to credit unions as an alternative to high-cost credit.
He added: “Positive action from industry to address real consumer concerns has wider-reaching benefits. By working with industry we can make changes that improve things for consumers far more quickly than legislating.”
John Lamidey, chief executive of the Consumer Finance Association, said: “The announcement thatBIS has commissioned independent academic research into the impact of a total cost of credit cap in the high cost credit market is good news. We will be raising with the researchers our concerns that rate caps would not make loans cheaper, they would make them unavailable. Reducing access to small sum, short term credit facilities to help people manage their personal cash flow in uncertain times, hardly helps consumers and could drive more people into the hands of unregulated and illegal lenders.”
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Source: http://www.cfa-uk.co.uk/
Might be of Interest: http://blogs.mirror.co.uk/investigations/2011/11/act-now-to-end-legal-loan-shar.html
Hah, seriously? That’s rediculous. No way