Widespread support for Scottish Government to act to protect Scots from payday loan and high interest lenders

A very wide range of organisations met yesterday in the Scottish Parliament at Kez Dugdale MSP's Debtbusters meeting to discuss how we can protect Scots from the usury practices of payday lenders and high interest credit providers. In attendance were MSPs, councillors, and representatives from the Accountant in Bankruptcy, the Scottish Trades Union Congress, credit unions, Citizens Advice, the Church of Scotland, welfare rights advisors, the Law Society of Scotland, Carrington Dean insolvency practitoners, and Money Advice Scotland.

Attendees heard an update on the campaign work of Kez Dugdale MSP and Stella Creasy MP on attempts to protect consumers from the exploitative practices of payday lenders in Scotland and the UK. The Scottish campaign was backed by the Leader of the Scottish Labour Party, Johann Lamont MSP who addressed the meeting, along with Margo MacDonald MSP, a fierce critic of usury lenders.

Govan Law Centre's Principal Solicitor, Mike Dailly, spoke to GLC's paper on Fast track Debt Arrangement Scheme to provide more flexible respite and a better escape route for Scots entrapped in toxic payday loans. A clear outcome from the meeting was the Scottish Government had to act, and we needed a multifaceted approach including:

• amending and improving the Debt Arrangement Scheme to better tackle the consumer detriment from payday loans (particularly so that interest and charges can be frozen from the very outset, whereas at present this can only happen on approval of a debt payment plan);
• a Scottish public 'wealth warning' campaign about payday loans, and much better financial education in Scotland, targeted at the payday loan demographic;
• the promotion of responsible credit union lending, with local government support through all tools available, and Scottish Government backing for a 'guaranteed loan fund' to enable credit unions to compete with payday lenders in the public interest.

GLC's Mike Dailly said: "Two and half thousands year ago the Romans capped interest rates at around 8.3%. It's hard to believe we've allowed toxic payday loans to flourish in 21st century Britain, with citizens bring charged up to 5,000% APR. Many states in America have banned these products, and in 2007 Congress introduced a law to ban payday loans for military personnel because it was seen as a national security issue.  We believe it is a national financial health issue in Scotland". 

"Often the result of such expensive indebtedness is enforced poverty, personal hardship and threatened homelessness as clients cannot pay their rent or mortgage or buy household groceries as payday lenders hoover money and charges from their bank accounts each month.  While the Scottish Parliament cannot ban payday lending we do have the devolved power to protect our citizens from exploitation by using debt laws innovatively". 

A full report report from the meeting has being prepared by Kez Dugdale's office, together with the next steps for the Scottish campaign, which Govan Law Centre fully supports.