Mon 8 Jul 2019, 03:11 AM | Posted by editor
LETTER from Mark Langabeer, Newton Abbot Labour Party (personal capacity)
Panorama’s reporter, Fiona Phillips, investigated the rise in personal debt. The programme, entitled, Easy money-Tough Debt, reported that there are over eight million people who are unable to pay their debts. Following the scandal of the payday loan firm, Wonga, who charged up to an incredible 5853% interest for loans, the financial ombudsmen ruled that repayment can’t exceed double the original loan.
However, this only applies to payday loans. Credit card and catalogue debt are excluded from these restrictions. Also on the rise is credit that requires a guarantee. A typical loan of £4000 over three years will cost an extra £3000. As a guy, who acted as a guarantor for a former partner, points out on the programme, companies can chase either the borrower or the guarantor in default cases.
The programme revealed that many pay-day loan companies are failing to lend responsibly. For Amigo, the largest of them, debt recovery in the form of county court judgements was greater than the high street banks in both Scotland and Northern Ireland. The Ministry for Justice declined to provide the figures for England and Wales.
The programme interviewed the Labour MP Stella Creasy, who believed that the all loans should be subject to the limit imposed on payday loans. Debt charities have also campaigned for a 60-day breathing space for those that have defaulted on their payments. However, these proposals do not go to the root of the problem.
The problem of debt is largely a problem of low income. I’ve watched adverts which offer loans to cover basic needs, not fast cars or luxury holidays. This was confirmed by the contributors in the programme. Labour must nationalize the major banks and finance houses. It could supply loans, on a ‘not for profit basis’, with interest rates no greater than the rate of inflation. The Panorama programme is still accessible on BBC i-player, at:
https://www.bbc.co.uk/iplayer/episode/m00062jn/panorama-easy-money-tough-debt
