MP to introduce a bill calling for interest rate caps.

[Legal Beagles]

Stella Creasey (Lab, Walthamstow) will introduce a Bill in Parliament which calls for caps on interest rates.

The Consumer Credit (Regulation and Advice) bill is a Ten Minute Rule Bill and will be debated on 3 November.
Ten Minute Rule Bills allow backbench MP’s to raise a bill and are heard on Tuesdays and Wednesdays after departmental questions and ministerial statements. The MP may give a statement of up to 10 minutes in support of their proposal, and any MP that objects can then make a 10 minute speech in response. The Government will rarely allow a ten minute bill to progress far enough to become law, so they are often used as a way to get publicity for a particular issue.
The bill calls for:

• The total lending rate that can be charged for providing credit and imposing additional interest on late payment and default charges to be capped.

• Local authority planning committees to have powers enabling them to restrict the provision of premises for licensed consumer credit agencies within the local area.

• A levy on the sale of credit cards and store cards which will then be used to set up a fund offering grants for the provision of debt advice and financial management services.

• Requirements for the Post Office network to integrate its services with credit unions, in order to help consumers gain access to credit union loans, current accounts and savings accounts via Post Office branches.

For more information on the bill visit the Working for Walthamstow site


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[Amethyst]

Re: MP to introduce a bill calling for interest rate caps.

isn't that stuff in the consultation we're working on anyway ?

[thincat]

Re: MP to introduce a bill calling for interest rate caps.

Brilliant idea for a Bill. Did it get far?

Thincat.

[Amethyst]

Re: MP to introduce a bill calling for interest rate caps.

Consumer Credit (Regulation and Advice): 3 Nov 2010: House of Commons debates (TheyWorkForYou.com)

Bill read the First time; to be read a Second time on Friday 4 February and to be printed (Bill 103).

Progress - Parliament UK: Bills before Parliament




Ooo nice to see Dennis Skinners name on it. (He's my local MP and rather cool despite supporting the wrong party lol)

[EXC]

Re: MP to introduce a bill calling for interest rate caps.

isn't that stuff in the consultation we're working on anyway ?

Some of it is. These private Members Bills do seem to coincide with relevant consultations don't they? Maybe it's a way of giving them publicity.

[Amethyst]

Re: MP to introduce a bill calling for interest rate caps.

Or making the member look like they can take the credit for something thats already underway anyway (but thats just cynical!)

[Amethyst]

Re: MP to introduce a bill calling for interest rate caps.

Well the FLA arent keen

FLA warns MPs not to play into the hands of loan sharks


Ahead of a debate on consumer credit regulation on Tuesday, the FLA has briefed MPs that rather than protecting consumers, calls for further regulation of credit markets could drive people into the arms of illegal loan sharks.
The debate follows the introduction of a Private Member’s Bill on Consumer Credit1 in Parliament last week. Many of the Bill’s provisions– e.g. caps on interest rates – would have the unintended consequence of making it harder for legitimate lenders to lend would lead to higher prices and less choice for many borrowers.2
The FLA has explained to MPs that restricting lending rates for loans and retail credit will undermine responsible lending. At present credit providers set their prices to cover the risk of default. If this is no longer allowed, regulated credit is likely to disappear from some markets altogether, and the cost of credit for the vast majority of consumers who borrow responsibly will increase.
The FLA is calling for MPs to reflect on the consequences for consumers of further market intervention, before new European and UK lending rules (including the new EU Consumer Credit Directive) have taken effect early next year.3
Fiona Hoyle, Head of Consumer Finance at the FLA, said:
“Coming on top of all the recent new regulation, further restrictions will have the unintended consequence of forcing legitimate and responsible lenders to leave the market, or raise their prices, or both. We hope MPs will instead focus on the illegal loan sharks who prey on people who are in financial difficulty.
“The real risk now is a society polarised between the credit “haves” and “have-nots”. We hope MPs will think carefully about any measures likely to make that worse.”
- ends -
Note to editors:
1 The Consumer Credit (Regulation and Advice) Bill is a Private Member’s Bill introduced by Stella Creasy, Member of Parliament for Walthamstow, on 3 November.
2 Other countries that operate interest rate caps have a higher proportion of financially vulnerable people than the UK (50% compared to 20%, according to Genworth’s annual vulnerability index published this week). The FLA’s our own research into consumer credit shows that – for example – just 5% of people buying with store credit are behind with their payments, and more than half of store card users are either in credit or have a zero balance.
3 The Office of Fair Trading reviewed the high cost lending market earlier this year and concluded that it meets an important need for many people who cannot access credit elsewhere, that prices reflect market realities, and that complaint levels are low.In 2009 FLA members provided £72.5 billion of new finance to UK businesses and households. Almost £19.3 billion of finance was provided to businesses and the public sector, representing around a quarter of all fixed capital investment in the UK last year. £53.2 billion was in the form of consumer credit, including a third of all unsecured lending in the UK. And £16.5 billion supported the purchase of half of new car registrations in the UK.

FLA warns MPs not to play into the hands of loan sharks - Finance Leasing Association


(also Genworth Index - Consumer Financial Vulnerability - Genworth UK - )