South Scotland MSP Claudia Beamish has welcomed a debate in Parliament on the regulation of the payday loan industry for further highlighting the issue.
The Member’s Debate supported plans by the Financial Conduct Authority to introduce tougher regulation of the industry.
Under the changes, due to come into force on 1 April 2014, lenders will need to provide affordability checks, clear risk warnings and signposting to free debt advice among other changes.
This week’s debate comes as the Dumfries and Galloway Citizens Advice Service released figures showing that another form of high cost loans, doorstep lending, has increased dramatically in the last year.
The findings showed that doorstep lending is on the increase across the region with the service dealing with 183 clients with an average doorstep debt of £1,136. This is up 42% on the same time last year.
Speaking after attending yesterday’s debate, Claudia Beamish MSP said: “Over the last couple of months we have seen some welcome progress to highlight the dangers of payday loans.
“The FCA’s new rules are a big step forwards and I’m pleased the Scottish Government has stepped in with the 12 Days of Debtmas campaign to help promote credit unions as an affordable alternative.
“However, these findings from the Citizens Advice Service show that there is no room for complacency. “At this time of year, it is tempting for people to over-extend themselves financially but people need to be aware of the costs. Payday loans and doorstep lenders seem like an easy option but the interest they charge is astronomical.
“That is why the work of the CAB is so important, providing free and impartial advice that can help to manage money worries. I would encourage anyone who is worried about debt to make contact with the CAB sooner rather than later.”