At a meeting of North Ayrshire’s full council on Wednesday 8th May, Elected members unanimously backed calls from Irvine Councillors Burns and Maguire to authorise the Leader of the Council to contact the OFT and call for the strongest possible action against Legal Loan sharks.
Introducing the motion Cllr Marie Burns praised previous well documented awareness and campaign work by both Local MSP Margaret Burgess and Labours Kezia Dugdale.
Councillors heard that at a time when household finances were under pressure some Payday lenders were damning people to a lifetime of debt by failing to carry out checks to make sure borrowers could afford to repay the loan. Recent figures released by Citizens Advice show that 65% of payday loans don’t come with financial checks, people are not being asked about their current financial situation which has led to 7 in 10 not being able to pay back the loan. The figures also showed that borrowers who weren’t asked affordability questions and had repayment problems were further let down by lenders as:
- 6 in 7 did not offer to freeze the interest and charges when the borrower agreed repayment.
- 71% did not explain how much it would cost to extend the loan.
- 84% did not treat people sympathetically.
These practices go against pledges the Payday loan industry made in its customer charter launched in November 2012.
Speaking during the debate Irvine Cllr Ruth Maguire gave an example where someone despite paying £57 a month on a £500 loan for 6 months still owed £437 and said “These companies are not standing by their promises to treat people fairly and check that customers can actually afford the loans they are selling them. The knock on effect of their greed and irresponsibility is devastating for our communities as families become consumed with debt”