Page last updated at 20:13 GMT, Thursday, 12 January 2012

Members' Business: High-interest payday loans

SNP MSP Margaret Burgess led a member's debate, on payday loans to raise awareness of the impact on individuals and their families and to urge the UK Government to take immediate action, on 12 December 2012.

Payday loans are small, short-term unsecured loans designed to tide people over until they get their salary.

If the money is paid back promptly on the next pay day, this type of lending can be cheaper than paying an unauthorised overdraft or a credit card charge.

Payday loan companies often charge rates of interest eclipsing 4000% APR.

Ms Burgess, who was previously manager of East Ayrshire Citizens Advice Bureau, told MSPs more and more people were resorting, in desperation, to taking on payday loans only to find themselves pushed further into debt.

She said: "That's why I believe the UK government should take action now to regulate high interest lending before it spirals further out of control, forcing more people into bankruptcy, homelessness and despair."

Ms Burgess called on the UK government to introduce stronger crisis loan regulation to protect consumers, especially vulnerable people, and that it could tackle the issue of dishonest and irresponsible lending.

Energy, Enterprise and Tourism Secretary Fergus Ewing congratulated Ms Burgess for bringing the debate to the chamber and for her work before being an MSP on the issue of pay day loans.

Mr Ewing said it was an "extremely serious issue" and that there was a "genuine and concerted desire across the chamber to see action in this respect".

"Usurious lenders are perpetrating a practice in Scotland which is simply not acceptable."

The minister concluded by saying there was a cap on the interest credit unions can charge but not for others and asked why there was not one.

He pledged to find out and drag the issue of high ineterst payday loans from lurking in the shadows.


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