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Labour Councillor Chaun Wilson on Pay-Day Lenders

On 2nd April, Cllr Chaun Wilson gave the following speech to Full Council on Pay-Day Lenders:

Thank you madam mayor

This is not the first time I’ve spoken about payday lenders and I’m sure members will recall the motion I proposed last year, calling on the authority to ‘use every means available to promote the use of credit unions and other responsible lenders to residents.’

Since then, we have seen a belated but welcome u-turn by the Government on capping loan rates.

However the impact payday loans are having across the country continues to grow, with statistics published last month by the charity Step Change reporting the number of people with payday loans seeking debt advice from them had increased 82% in 2013 in comparison to the year before.

Though intended as a short term solution to temporary cash flow issues, the number of people now utilising payday loans to support longer term financial crisis has grown significantly with lending to these groups encouraged through aggressive marketing techniques often aimed at vulnerable groups such as children, young people, students and the elderly.

And as desperate situations often erode individual choice, people are taking out payday loans because they have no other financial choice available to them, with over 86% of people having used their loan to pay for essentials such as food and heat.

Though the industry claims it only lends to people who can afford to repay loans, they have been accused of irresponsible practice with Citizens Advice figures suggesting 61% of loans are based on insufficient and inadequate information. As a result three in every four people struggle to pay back loans with 61% having more than one loan at any one time and 56% regularly incurring excessive charges with many taking out additional loans to payback other lenders as their debt begins to spiral out of control.

Despite 70% of Britons supporting an outright ban on pay day lender advertising, some have suggested banning access to such sites on local authority equipment is paternalistic, patronizing and unacceptable censorship, suggestions which I strongly dispute.

As a responsible local authority we ban access to illegal and pornographic sites and taking into account the aggressive marketing tactics of payday lenders and levels of public condemnation seen across the UK, extending the ban to include these sites is something which we should all be supporting.

An increasingly number of local authorities agree with at present well over 50 local authorities across England having banned access to pay day loan websites on all council computers, in both offices and public buildings such as libraries. These include not just Labour authorities such as Manchester, Birmingham and Liverpool but also Conservative controlled authorities such as Surrey, Trafford, Essex County Council and Cheshire East.

In addition with the backing of the NUS, several universities have pledged to ban all advertising by payday lenders who have been described as modern day loan sharks.

When banning access to these sites, many councils have set up an automatic redirect to the website of their local credit union, a responsible lender and we are fortunate here to have the excellent East Sussex Credit Union - this is surely in keeping with the commitment we as a Council made last July to ‘use every means available to promote the use of credit unions.’

This is a policy we could implement quickly, easily and at little or no cost to the authority and is the responsible thing to do. I therefore call on colleagues from all parties to support this motion and promote responsible lending to our residents.

Thank you

 

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