M.P's Demand Action on Extortionate Lending
4th November 2004

More than 100 M.P's, from all parties, have today called on the Office of Fair Trading to take action against legal loan sharks. In a letter to John Vickers, Director General of the OFT, the M.P's call for an inquiry into the rates of interest that can be charged by loan companies. The call follows last weeks decision by Liverpool County Court that ruled a secured loan from London North Securities which escalated from £5,570 to over £380,000 could not be enforced against the borrowers as it grossly contravened the principles of fair trading (see our previous news item, 'After Meadows - Can the Courts Stop Extortionate Lending' for further details).

Graham Allen M.P has also laid down an early day motion calling for legislation to be introduced to outlaw similar loans in the future.

Debt on our Doorstep immediately welcomed the call for an inquiry, and urged that this be used to inform any proposed legislation to reform the Consumer Credit Act. The intention to introduce new legislation is expected to be announced by the Government in the forthcoming Queen's Speech.

Damon Gibbons, Co-Chair of Debt on our Doorstep, commented:

'There is a need for an inquiry to be held. Not only into current practices, but to reassess the DTI's decision to rule out interest rate caps as a means of curbing the worst practices of lenders. That decision is now looking increasingly ill-judged. If we are going to get real protection for low-income borrowers then an open inquiry into the current excesses of lenders, and a proper debate about potential ways of regulating the market are essential'.