Camden backs new local campaign against legal loan sharks

An energetic new campaign spanning Camden and Brent has organised a key event tomorrow (Wednesday) night in Wembley to highlight growing concern about legal loansharks.

Many, like me, are worried about the proliferation of payday lenders in our area and the consequences for residents who, through dire economic circumstances and the impact of welfare reform, may find themselves forced to take out loans with eye-watering interest rates from these legal loansharks.

The event is free to attend – so do come along; more information and registration can be found here. It kicks off at19:15 at Chalkhill Community Centre, 113 Chalkhill Road, Wembley, HA9 9FX

It’s going to be a great evening, with the leaders of both Brent and Camden councils (Cllr Sarah Hayward and Cllr Mo Butt) and the doyenne of legal loanshark campaigners, Stella Creasy MP. Hats off to Kilburn resident and Labour activist Mat Lawrence for being the driving force behind the campaign and the event.

I’ve seen the way these shops have sprouted up in Kilburn (I’ve been told we have one of the highest densities of payday lenders in the country), so I used the occasion of last week’s Full Council meeting to table an oral question, asking for Camden to support the campaign and do more to tackle the problem.

Sadly, due to time constraints, I didn’t get to ask the question.  But the answers have now been given, and I’m pleased to say that Labour-run Camden is fully behind efforts to tackle the problem.  There’s lots local authorities can do to support residents and help campaign against payday lenders and their license to ruin lives of the vulnerable.  This is a good start.

I’ve pasted in my question and the reply below.  It’s long, but worth reading through…

 

QUESTION 5 (Oral)

TO THE: LEADER OF THE COUNCIL
BY: COUNCILLOR MIKE KATZ

Lack of access to affordable credit is socially and economically damaging: the proliferation of payday loan providers throughout the borough and in my ward in Kilburn risks creating huge social problems. Unaffordable credit can force residents into a downward spiral of indebtedness, with huge impacts on them and their family, from being unable to pay rent, council tax and other bills to keeping homes warm and being able to afford a healthy diet. A new local group, CABALS (Camden and Brent against legal loan sharks) is joining other efforts up and down the country campaigning to end „legal loan sharking‟. Will the Leader endorse the efforts of this campaign to bring attention to the dangers of legal loan sharks, and help promote credit unions as an affordable alternative for Camden residents?

REPLY:
No one is more aware than this current administration of the economic plight of many of our residents, the challenges of financial inclusion and the need to provide accessible expert advice to our most vulnerable residents across the whole borough.

Irresponsible lending can cause debts to become unmanageable: some loan and credit companies are charging annual interest rates equivalent to over 2500%. Borrowing at these rates repeatedly tips customers into inescapable cycles of debt and poverty. High debt repayments are linked to rent, council tax and utility arrears, constraints on job seeking behaviour, poor diets, cold homes, and mental and physical health problems. This is being increasingly termed legal loan sharking, a national scandal which we will proudly lobby to be stopped.

The government has committed to regulate excessive interest rates on credit and store cards, and yet is paradoxically allowing the much more pernicious practice of legal loan sharking to continue. Government initiatives to date have not worked. The only way to stamp out legal loan sharking is by establishing a lending rate cap to cover all forms of consumer credit in order to reduce prices in areas of the market that are not price competitive. Importantly, a cap needs to be accompanied by increasing access to more affordable, responsible sources of credit.

I have a long track record of campaigning on this issue, not least objecting to Mayor Boris Johnson‟s shameful decision to take advertising revenue from Wonga in Christmas 2010; the key time of year when many families are feeling the pressure of debt. I wrote to the Prime Minister on this issue and did not receive a reply.

I will endorse Camden and Barnet Against Legal Loan Sharks and I will be writing again to the Prime Minister to explain why the Council is supporting this campaign, asking him to cap the total cost of credit and strengthen fairer financial alternatives to legal loan sharking.

We are also investigating what powers the Council has to prevent the further spread of legal loan sharking.
The Council has already made a significant statement in addressing these issues through a range of interventions:

  • Through its £1m per annum Equalities and Cohesion Fund, the Council is investing in a range of projects designed to promote awareness and financial confidence, be it advice and guidance services or community outreach to prevent finance and debt issues before they start.
  • Through this funding we have also made a commitment to promoting accessible financial products for Camden residents through our on-going financial and organisational support for the Camden Plus Credit Union based in Kentish Town.
  • The Camden Advice Partnership, a partnership of local voluntary and community sector organisations and council provision that is working together to meet the advice needs of residents in Camden and achieve social outcomes around that increase the awareness of residents‟ rights and entitlements, increase the awareness of services on offer, improve confidence and improve personal finances. The annual figure that the Council are investing in CAP is £1.133m.
  • The recently launched Equality Taskforce will use evidence-based research and Council resources to tackle inequality in Camden.
  • A key objective in the Camden Plan is to develop new solutions with partners to reduce inequality.

 

 

 

 

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