Council supports plan to cap loan firm interest rates

A BID to stop loan firms charging extortionate interest rates has been given full backing by the borough council.

Councillor Michael Wincott tabled a motion at the Full Council meeting on Wednesday asking the government to cap rate and charges and promote credit unions instead.

Cllr Wincott has already been approached by one desperate woman who has taken up two loans at 750 and 200 per cent. He is also concerned about a new loan firm opening in Queen’s Road.

Addressing the council, which gave unanimous approval, he said: “On the day that we learn that the UK recession is deepening, the people of this town need protection. Protection from payday loan companies.

“You will have seen shop windows - like one in the town already - with eye-catching promises of instant money and in the small print, eye-watering levels of interest and incredibly high charges.

“Companies clearly making a profit from the misery of others and helping create a cycle of poverty. If you have a poor credit history and need money quickly this is exactly the place you would go.

“Many people become trapped in debt. They service the interest of their debts rather than reducing them.

“Do you remember when we used to look at credit cards with interest rates of 20 or 30% and be shocked. These companies are charging between 200% and 16,000% interest over a year.

“I believe that central government should set aside national and local funding for marketing materials, television, print and radio advertising. How on earth will credit unions ever be known about and used - if they cannot take the wonga.com’s and The Money Shop on at their own game. I know this type of glossy advertising is expensive - but the good it can do for the public, for our residents, is immense.

“Let’s ask the government to cap the charges, give us power to prevent the spread of these shops - and - actively promote credit unions to the full.”

Speaking to the Observer yesterday, cllr Wincott added: “The woman who approached me is working part time but is struggling to make the minimum payments.

“She is looking at up to 70 years to pay it all back.

“And if she wants to pay it back you need to pay a high admin charge. There aren’t a lot of jobs in Hastings so these are the places where the firms target.

“We need more infrastructure and jobs to prevent people being forced into these desperate actions.

“We must also push organisations like credit unions who can save so many from getting into serious financial difficulty.”

For more information about the Hastings & Rother Credit Union visit www.hrcu.org.uk or call 202651.