The Coalition Government has announced plans for a cap on pay day loans. This comes after over a year of Liberal Democrat calls for tougher action on pay day lenders.

The Financial Conduct Authority (FCA) will now have the power to cap the cost of payday loans. The Banking Reform Bill will also create a duty on the FCA to cap the fees and charges imposed by payday loan companies.

The Liberal Democrats are also keen to promote credit unions as an affordable alternative to payday lenders and as an ethical investment to people who are looking to save. Credit unions offer:

• Low-cost loans to those in need of short-term financial support.
• Ethical community investments

The Coalition Government has recently invested £38m to support and expand credit unions.

Haringey Liberal Democrat Leader Cllr Richard Wilson and local Lib Dem MP Lynne Featherstone, who are both members of the local credit union, have urged local residents to add their support. 

Liberal Democrat MP for Hornsey and Wood Green, Lynne Featherstone, comments:

“I welcome this announcement. The Liberal Democrats in Government have worked hard to secure tougher action on pay day lenders. Now we have given the new financial regulator, the FCA, power to cap the cost of payday loans. Through the Banking Reform Bill, we are also creating a duty on the FCA to cap the fees and charges imposed by payday loan companies.

“We are also continuing our support for credit unions, which offer lower interest loans and ethical investment opportunities. It is fantastic to have a credit union operating in Haringey, and I am happy to help promote them.”

Cllr Richard Wilson, Lib Dem Leader of the opposition and Credit Union member, comments:

“I am delighted by this announcement. Capping the cost of pay day loans will help lots of people who would otherwise be hit with massive bills for pay day loans.

“I would still encourage people to join the credit union though as they provide much lower cost loans and an ethical investment.”