Today [Tuesday 15, 2013] Paul Blomfield, Labour MP for Sheffield Central, will make another stand on payday lending by petitioning the Financial Conduct Authority (FCA) to do more to stop rip off lenders trapping millions of people in debt.
The call from the member of parliament for Sheffield Central is a response to the failure of government and the shortfall of the regulator to really take issue with the payday lending industry.
The government talks the talk on the problems of payday lending. Jo Swinson MP, the consumer affairs minister, admits there is something wrong with a system that allows lenders to trap people into spirals of debt. But her government subsequently chose not to support Paul's bill.
Equally the FCA, who will take over regulating the payday lending industry in April 2014, said they would be a 'regulator with teeth'. However the city watchdog's consumer credit rules are severely lacking.
This is where this new charter comes in. Paul Blomfield's work alongside noted charities such as StepChange and Citizens Advice aims to achieve a popular public response that urges the regulator to make good on earlier commitments to rigour.
At least three working days prior warning before lenders can withdraw money from customer's accounts and the complete end to dangerous rollovers are commitments the FCA can sign up to.
Carl Packman, author of Loan Sharks: The Rise and Rise of Payday Lending, commented saying:
“It's just a pity that Paul has had to do it. His bill earlier in the year was an absolutely golden opportunity for the government to show they are really committed to tackling rip off lenders – but for political reasons let the bill fail.
“In addition to Paul's demands of the regulator I would suggest payday lenders act straight away themselves. Not everyone who walks through their doors are suited to such an expensive credit product. If they were responsible lenders they would signpost ethical and cheaper alternatives like credit union loans to those looking to borrow money.”