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MP Calls for Payday Loans Price Cap

Labour MP Stella Creasy has called for the prices charged for payday loans to be capped. The MP presented figures from a survey today showing that a majority of those surveyed believe that payday loans should have a cap on the total costs to prevent them spiralling out of control.

On the BBC’s Today programme Ms Creasy called for the Financial Conduct Authority to be given the powers to limit the total charges by payday loan lenders.

A survey was released last week that showed that increasing amounts of people are being trapped in a spiral of debt due to the loan fees. In reality it is probably not the only contributing factor, most lenders charge late fees whether it be for a missed direct debit or a late credit card payment.

The survey shows that more than 60% of people who take out payday loans are doing so to pay for household bills or other essentials. Ms Creasy said: “With any loan you ever take out there would be a number beyond which interest rates, late repayment fees, admin charges it would never go. You set a ceiling which would be different on different types of loans.”

“It would be higher than a basic interest-rate cap, but it would be more effective because when you talk to people in other countries that have got interest rate caps lenders just charging an admin fee to get around it.”

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