Durkan hails cost cap for pay day loans

SDLP MP for Foyle, Mark Durkan.
SDLP MP for Foyle, Mark Durkan.

SDLP Foyle MP Mark Durkan has welcomed the new cap on the cost of payday loans which came into effect in the New Year.

Mr Durkan, who sat on the Financial Services Bill, the Banking Reform Bill and the Consumer Rights Bill committees at Westminster said: “I welcome the fact that payday loan rates will now be capped at 0.8 per cent per day of the amount borrowed, and that no-one will have to pay back more than twice the amount they borrowed.

“In recent years, Private Members Bills to cap and control predatory credit companies have come into the Commons and I supported them all. Also, in amendments to the Financial Services, Banking Reform and Consumer Rights Bill, I joined with others to press the government for more robust and relevant regulation which they were resisting.

“Of course throughout all these campaign efforts, the payday loan companies opposed new controls and claimed to be advocating for their consumers.

“The government eventually moved to concede that the new Financial Conduct Authority (FCA) could have some regulatory power over payday loan companies.

“While the government continued to resist the arguments for more definitive standards, the FCA itself has felt compelled by the scale of the problems to act in its new role.”

Mr Durkan said it is important pressure is kept on the Government and the Financial Conduct Authority (FCA) to ensure they clean up the credit market.

“I will therefore continue to work with other parliamentarians and consumer rights groups (including the Charter to Stop the Payday Loan Rip-off and the Which? Clean Up Credit campaign) – not least in terms of addressing the issue of disproportionately high fees being charged by payday loan companies and other lenders if borrowers default on loans.

“More action is needed if we are to clamp down on excessive charges and irresponsible lending, and make sure that borrowers are being treated fairly whatever form of credit they are using.”