MPs and Peers back Sun campaign to end rip-off credit fees and stop vulnerable Brits being preyed on by lenders
MINISTERS must act now to cap rip-off credit fees and stop hard-working Brits being fleeced by legal high street loan sharks, MPs and Peers have demanded.
Politicians across the spectrum have thrown their weight behind The Sun's campaign to end rip-off doorstep lending fees and rent-to-own credit agreements.
Today, we also reveal:
- Thousands of Sun readers back the campaign on social media, via comments and on email
- Actor Michael Sheen is set to call for 'fairer credit alternatives' for the UK's poorest families
Millions of struggling families are stuck paying sky-high interest rates of up to 1,557 per cent when they borrow cash to buy a telly - or even just pay the bills.
Some seven million households turned to high-cost credit last year - but many end up paying back more than double the amount they borrow.
Why we want to Stop The Credit Rip-Off
WE never want you to pay more than double the amount you've borrowed - whether it's for a new sofa or a loan to help pay your bills.
That's why The Sun has launched a campaign calling for a cap on the total cost of rent-to-own loans and doorstep lending at double the original price or loan amount.
A similar cap was introduced for payday loans in 2015 and since then the number of people struggling with unmanageable debts to those lenders has more than halved, according to Citizens Advice.
People on the lowest incomes, living in the poorest places, are paying a poverty premium - up to 7 million people have resorted to high-cost credit, according to the Department for Work and Pensions.
People whose wages or benefits don't stretch far enough need to borrow from rent-to-own or doorstep lenders to help pay for things such as an unexpected bill or to furnish their homes.
These come with exorbitant rates of interest - more than 1,500 per cent in some cases of doorstep lending.
It is scandalous that one mum who borrowed cash to help keep a roof over her family's head and ended up paying back over THREE times the original amount.
It's time to stop the credit rip-off.
Here's what we demand:
Rent-to-own
- Cap on all repayable costs at double the item list prices (including fees, add-ons and interest)
- Ban on incentives for all sales staff
- Ban on discounts for existing customers to tempt them into more credit
- Companies to publish example interest rates and costs on all payment options
Doorstep lending
- Cap at double the original amount borrowed
- Stricter affordability checks
- Ban on discounts for existing customers to tempt them into more credit
It's time to Stop the Credit Rip-off.
The Sun wants firms to put a cap on the total amount of credit so that no-one ever pays more than double the amount of what they are lent.
Lib Dem Leader Vince Cable congratulated The Sun for its Stop The Rip-Off campaign.
He said: “I welcome the Sun’s campaign against rip-off credit.
“Interest rates have never been lower, yet many borrowers are suffering financially brutal experiences through these sharks.”
And former Pensions Minister Baroness Altmann said: “Congratulations to The Sun for its important work to highlight this issue.
"The sooner we do this, the better, so that people can enjoy an improved standard of living.";
Tory backbencher Robert Halfon stormed: "These kinds of loan sharks are getting their teeth into the most vulnerable, savaging their incomes with jaw-defying interest rates.
"It's time to support the Sun’s campaign and back the cap and ensure a fair deal on loans for everyone."
Labour’s Stella Creasy, who campaigned for fairer credit - including payday loans and high interest rate credit cards for a number of years - added: “These companies have prayed on people struggling to make ends meet - that’s why we need to change the law so no one gets stuck in a debt trap by capping what people pay.”
Her colleague Rachel Reeves said loans from "vultures" were creating misery for thousands of Brits.
She told The Sun: "Unscrupulous lenders prey on vulnerable people by charging sky-high interest rates on their loans when they know borrowers are already struggling to make ends meet.
"It is time the Government took urgent action against these vultures and the misery they create with their rip-off doorstep loans and rent-to-own schemes."
It's time to Stop the Credit Rip-off.
Tory MP Charlie Elphicke, who has campaigned against rip off rent to own rates as a member of the Treasury Select Committee, said: “For too long firms like Brighthouse and PerfectHome have been lining their pockets at the expense of struggling families. Thousands of people are paying sky-high interest rates which they simply cannot afford.
“I’m fully backing the Sun’s campaign to bring in a cap on the cost of these loans.”
Louise, who lives in Guildford, had fallen behind on her rent and was waiting for benefit payments.
"I was so desperate for the cash... I went for it. I was a single mum struggling and I had a child with special needs. I had no choice but to go to them," she said.
It took her six years to pay back the initial loan. She paid back a total £3,200 - more than three times the original amount.
Makerfield MP Yvonne Fovargue, Chair of the All Parliamentary Group on Debt, insisted that the Sun’s demand of a cap across the board was necessary to tackle the "appalling" problem.
She told us that loan agents would literally walk around door to door with wads of cash to offer to people they knew were coming to the end of their current deal.
“This has been an issue since before I was an MP.
MORE ON STOP THE CREDIT RIP-OFF
“They are loaning to people who have very little choice in the matter, and they need to be more ethical about it as they are more vulnerable."
Ms Fovargue, who was formerly a regional boss at Citizen's Advice, said the firms were deliberately "targeting" areas with levels of "high deprivation".
She was once told: "The reason they use a weekly figure and not a yearly one is because 'they aim at women and they like it simple'," she claimed.
And she said that rent-to-own goods were often hundreds of pounds more expensive than companies like John Lewis - once rip-off fees, service and shipping charges were bunged on top.
"We need to make sure that people who need credit have somewhere to go. And make sure they have savings schemes which fit around people's needs, not the other way around."
Alternatives to high-cost credit
IF you're in serious money trouble then here are some alternative places where you can go to for help:
Credit Unions - These are small not-for-profit groups that help people save and borrow money, and you may be able to get a loan. You can find out which credit union you are eligible to join by searching
Ask for an advance - You can ask your employer to give you an advance on your wages, or the JobCentre Plus may be able to arrange a short-term advance on your first benefit payment.
Foodbanks - These organisations help provide emergency food and toiletries to see you through to payday. You can see if you qualify for your nearest branch .
Check your benefits - Make sure that you are getting all the benefits that you are entitled to using this calculator from the charity .
Freecyle/Facebook groups/Gumtree and eBay - You maybe able to find free or cheap second-hand furniture.
Boost your credit score - If you're never rejected for credit then there are ways to show lenders that you can be responsible with your cash.
Jonathan Edwards, Vice-Chair of the group, said it was "legal daylight robbery" for Brits who are already at risk of falling into debt, and demanded more investment in financial education and more promotion of ethical lenders.
He said: “It is clear these pay day loan products are deliberately targeted towards vulnerable households and individuals desperately searching for a short term cash injection.
“These financial companies know exactly what they are doing. It’s minimal risk for them and the returns once they have people hooked are incredibly lucrative.”
Baroness Tyler of Enfield said the UK's financial sector was "failing those who need it the most".
She told The Sun: "The Government need to be giving this much more urgency.
"When the Prime Minister came in she talked about tackling the country's burning injustices - this one of those that needs action now."