Credit, Collections & Insolvency News
The Shadow Chancellor has announced Labour’s plans to place a cap on the total amount that can be paid in overdraft fees or interest payments.
The move is supported by campaigners, such as actor Michael Sheen, Labour’s says it plans will help an estimated 2.7 million people who according to the Financial Conduct Authority are stuck with permanent overdrafts and using them over 85% of the time and incurring higher charges.vIt is estimated these proposals will help those same people trapped in this persistent debt trap by more than £233m a year – the equivalent of £86 each a year.
John McDonnell MP, Labour’s Shadow Chancellor, said “The Tories’ rigged economy has seen real wages fall and insecure work multiply, whilst they handout huge tax giveaways to the super-rich and the banks. Too many families are having to rely on borrowing just to get to the end of the month, and are facing huge costs from our high-street banks. The national scandal of the low paid debt trap has to end. More needs to be done to level the playing field and bring greater fairness in consumer finance.”
“Labour will end the misery of permanent debt and extend the cap on borrowing charges to overdrafts. We’ll also introduce a £10 an hour real living wage, and build an economy that works for the many, not the few.”
Michael Sheen, actor and founder of the End High Cost Credit Alliance, welcoming the policy, said “High cost credit is more than just pay day loans, rent to own businesses or doorstep lending. Millions of people across the UK are also trapped in their overdrafts by extortionate rates of interest charged by reputable high street banks. As founder of the End High Cost Credit Alliance I want to see a future financial landscape that takes all of this into account and keeps us moving in the direction of an ever increasing fairness. Right now there are at least 2.7m people who urgently need our help in delivering a fairer system. Millions of individuals are already struggling as a result of low wages, rising costs and a lack of affordable options when it comes to credit.”
“Whilst doing everything we can to raise more awareness and deliver greater investment for fairer alternatives, we must also call on regulators to keep doing what is needed to make providers deliver a fairer deal for all those suffering now. That is why I am supporting this policy announcement.”
Damon Gibbons, Director of the Centre for Responsible Credit, welcoming the policy, said “We welcome Labour’s proposals today as an important step towards ending the debt crisis that many low income households are now facing. Too many families have become trapped by a failing model of financial services provision which sees banks and other financial institutions making often significant profits out of people stuck with permanent, high-cost debts.”
“It’s time for a fresh approach, with better regulation of our financial institutions in the interests of households and consumers.”
