Dr McLeod is backing calls by Enterprise Minister Fergus Ewing that the cap must be in place by April 2014 in order to end the misery that unconstrained interest charges are piling on many people across Scotland The UK Government has said that the cap will be introduced in January 2015 in measures being outlined as part of the Banking Reform Bill.
The StepChange debt charity recently reported that amongst their clients in Scotland, pay day loan debt accounts for the most dramatic rise in debts, while Dumfries & Galloway Citizens Advice Service has reported increases in both payday and doorstep lending. The Scottish Government has pledged to protect consumers pledging payday lenders would be subject to tougher regulation in an independent Scotland.
Dr McLeod commented:
“I am very concerned that the growth of payday lending is perpetuating a culture of exploitation as high interest borrowing casts thousands of people in Scotland into a spiral of debt. We are now also seeing doorstep lending becoming a real worry across Dumfries & Galloway
“While I welcome the news that an interest rates cap will be introduced, it is long overdue and it is disappointing that it will not be come into force until January 2015 at the earliest. Not only that, it is important that the new regulations are broad enough to cover doorstep lenders, which DAGCAS has found are becoming a significant problem across the region.
“Another 12 months of unconstrained pay day lending will do nothing to address the very real financial pressures being faced right now by people across Scotland. The Scottish Government recently launched the ‘12 Days of Debtmas’ campaign aimed at people who may get into financial trouble in the run-up to Christmas by using high interest, short-term credit.
“The Scottish Government has made clear that with the powers of independence we would act immediately to bring pay day lending under control. I join them in urging the UK Government to act now and I will be writing to UK Chancellor George Osborne to ask him to bring forward legislation in the new year and to ensure that it covers other forms of high-interest ending such as doorstep lending.”
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