With the Bank of England slashing rates towards zero you might think that typical APRs would have fallen too. Yet instead they range from 1351,7% to 9889,3% -- yes that really does read 10,000% APR. The big conclusion here is that lack of competition in the Payday credit market has led to many of the poorest people paying unbelievably high interest rates.
David Cameron has been warning about the massive rise in personal debt since well before Labour’s recession hit, but if the government thinks that the problem will be solved by lower official interest rates then this report shows that they are very mistaken. That’s why we are calling for the creation of a free National Finance Advice Service, for greater use of Credit Unions which help with saving as well as borrowing and for greater competition in the Payday lending market.
Indeed the most startling thing about this industry is that if you look at the biggest 5 lenders they all offer precisely the same APR on £200 borrowed over 31 days. It cannot be a coincidence that they all quote a staggering, yet precise 1286.10% APR. This is a clear indication that the market is not operating openly here, so we will force these companies to share data about individuals' credit performance, so that consumers are able to switch between companies without losing their credit history and this will force down rates.
This is a good initiative by Shapps. These loan sharks really are the scum of the earth - real bottomfeeders. They prey on the weak and vulnerable and it is up to government to put every obstacle possible in their way. They've got away with daylight robbery for too long.
UPDATE: Dizzy has more HERE.