Quick Quids, Long Term Debts

For several weeks I have been raising the issue of dangerous pay day loans in the Assembly. Today an independent report backed up my fears. In these difficult economic times an increasing number of us are trying to find new ways to make ends meet. With more traditional avenues of credit being difficult to come by, more and more people in Wales are forced to turn to “pay-day” or short-term lenders. These opportunistic loan companies have become a common sight on the TV, in newspapers and even on our high streets. They unscrupulously prey on vulnerable people who need supporting through a difficult time. Some of them tell their story here.

Their latest move is to promote heavily smartphone apps which make no mention of the rates of interest paid as you download them.

After only a few minutes I was able to obtain quotes from two of well known lenders; Wonga and QuickQuid, at rates of 4,214% and 1,734% APR respectively. This means, without taking into account fees and charges, if I had taken up Wonga on their offer and taken a £100 loan, in one month I would have had to repay £351.17 in interest alone. It is clear from these figures alone that these interest rates have spiralled out of control.

In addition, the lack of checks carried out by these companies has led to many people falling victim to identity theft. There have been multiple cases where constituents have spoke to their AM’s after pay-day loan companies have contacted them demanding huge payments, even though the individual has had no contact with any such company.

At the moment there is no legislation to place a cap on these outrageous interest rates and to govern the way the companies operate and promote themselves. I am particularly concerned that the increasing omnipresence of such advertising, apps and sponsorship (Wonga sponsored the Liberal Democrats) normalises such irresponsible borrowing and lending.

Westminster has clearly failed to govern these immoral practices. With many of these lenders based outside of Wales we must pressurise the Con-Dem government to act swiftly to ensure that the most vulnerable people in our community are protected from these wholly unfair lenders.

Though Westminster should regulate the market, we can do something in the Assembly and Wales to better publicise these exploitation. I have asked the First Minster twice to lead the debate in Wales and for better life skills education in our schools on APR, which research shows many people do not understand.

We must also support feasible alternatives in Wales such as credit unions and Moneyline Cymru, which offers support to many social housing tenants. I am very proud of Wales’ 22 credit unions, which currently offers support to 42,000 people. Plaid Cymru is the only party with its own credit union.  However, we must do more to ensure these ridiculous interest rates are capped and the people who are in need of help are not exploited, but treated fairly.

For further information about credit unions, contact the credit unions in Wales Helpline on 0800 4960865 or email creditunions@wales.gsi.gov.uk.