10:30pm Thursday 5th September 2013
THE Government must do more to regulate the pay day loan industry, Islwyn MP Chris Evans told the House of Commons today.
Leading a Backbench Business Debate on high cost credit, Mr Evans highlighted that Citizens Advice Bureaux in Wales have reported a 555 per cent increase in the number of people asking for advice about pay day loans.
He also spoke of concerns that this number could increase further, following a study by Shelter Cymru which has warned that nearly half of adults in Wales struggle to afford rent or mortgage payments.
Mr Evans said he had raised the issue in his maiden speech in the House three years ago, and has constituents who remain trapped in "an appalling cycle of debt" for whom the prospect of pay day loan to tide them over is very tempting.
He said the short term loan sector would not be abolished, and to do that would merely drive such money lending underground.
But Mr Evans urged the Government to introduce regulation limiting the amount pay day lenders can charge in hidden and administrative fees.
"In the UK you can end up paying back 74 per cent of your initial loan in charges and admin fees, on top of paying back the money you borrowed," he said.
"A cap on default charges and fees is already in place in the credit card and mortgage market and I do think we have to look at extending this to the credit industry."
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