MPs from all parties welcome success of The Sun’s ‘excellent campaign’ to cap rip-off credit fees
Tory MP Robert Halfon said: 'Congratulations to The Sun for yet again standing up for working people who were being exploited by lenders'
POLITICIANS from across the spectrum today congratulated The Sun after the success of our "excellent campaign" to cap rip-off rent-to-own prices.
Tories, Labour MPs and the Lib Dem leader all credited this website for helping to persuade finance bosses to crack down on the vast interest charged by many lenders.
The Financial Conduct Authority announced a raft of changes to overdrafts and stricter rules for doorstep lenders this morning.
It comes after The Sun's Stop The Credit Rip-Off campaign, which pushed to protect families from rent-to-own firms which persuade their customers to pay over the odds for essential household goods.
Top Tory MP Robert Halfon said today: “Congratulations to The Sun for yet again standing up for working people who were being exploited by lenders.
“This is great news - it means fairer loans for working people.”
Labour's John Mann added: “It’s a brilliant result for the Sun campaign, a boost to all consumers.”
Charlie Elphicke, a member of the Treasury select committee, said: “For too long people have been ripped off by sky-high rent-to-own fees.
"So it's welcome the FCA has listened to the millions of Sun readers calling for a cap on charges and curbs on doorstep lending. This campaign has struck a huge victory for consumers."
Lib Dem boss Vince Cable welcomed the proposed cap on rent-to-own - but warned the FCA has more work to do to protect consumers.
He said: “This has been an excellent campaign. Interest rates have never been lower, yet many borrowers have consistently ended up paying over the odds for their lending.
"There are some promising first steps here, but we must keep up the pressure.”
Ex-minister Ros Altmann, a veteran campaigner for consumers, said: "Well done Sun on your important campaigning for new rules to clamp down on high cost credit.
"Now let’s see the regulators introduce stricter rules quickly, to protect people from rip-off rates."
And Gareth Thomas, Labour MP for Harrow West, said: “I welcome the FCA's move to improve the high-cost credit industry and congratulate The Sun on its Stop the Credit Rip-Off campaign.
"Today's news will improve the lives of millions of the poorest people in our society all too often find themselves reliant on this type of credit.”
Barrow and Furness MP John Woodcock added: "This is the positive action we have fought for, which would help protect people from being trapped by spiralling debt. This action is a really encouraging win for the campaign, but there is more to be done and we will continue to push for more."
Stewart McDonald of the SNP said: "Rip-off creditors have had a devastating effect on struggling households, and it’s promising that the Financial Conduct Authority is getting squarely behind ordinary consumers."
The FCA said it would consult on plans to introduce a cap on rent-to-own prices with the aim of introducing changes by April 2019.
Why we want to Stop The Credit Rip-Off
WE never want you to pay more than double the amount you've borrowed - whether it's for a new sofa or a loan to help pay your bills.
That's why The Sun has launched a campaign calling for a cap on the total cost of rent-to-own loans and doorstep lending at double the original price or loan amount.
In a major victory for our campaign, the Financial Conduct Authority is now consulting on the bringing in the rule - which could come into effect as soon as April 2019.
A similar cap was introduced for payday loans in 2015 and since then the number of people struggling with unmanageable debts to those lenders has more than halved, according to Citizens Advice.
People on the lowest incomes, living in the poorest places, are paying a poverty premium - up to 7million people have resorted to high-cost credit, according to the Department for Work and Pensions.
People whose wages or benefits don't stretch far enough need to borrow from rent-to-own or doorstep lenders to help pay for things such as an unexpected bill or to furnish their homes.
These come with exorbitant rates of interest - more than 1,500 per cent in some cases of doorstep lending.
It is scandalous that one mum who borrowed cash to help keep a roof over her family's head ended up paying back over THREE times the original amount.
It's time to stop the credit rip-off.
Here's what we demand:
Rent-to-own
- Cap on all repayable costs at double the item list prices (including fees, add-ons and interest)
- Ban on incentives for all sales staff
- Ban on discounts for existing customers to tempt them into more credit
- Companies to publish example interest rates and costs on all payment options
Doorstep lending
- Cap at double the original amount borrowed
- Stricter affordability checks
- Ban on discounts for existing customers to tempt them into more credit
It's time to Stop the Credit Rip-off.
It is also considering a ban on extended warranties offered by firms such as BrightHouse.
And new rules will restrict doorstep lenders from predatory practices, such as offering customers new loans when they're already struggling with existing debt.
But some campaigners have complained that the FCA isn't being tough enough on the high street banks which make millions from overdrafts.
John Bird, founder of the Big Issue and a member of the House of Lords, said: “Though it's good to see the rent-to-own sector now faces a price cap, it looks as if the FCA is still dragging its feet by not imposing the same restrictions on bank account overdrafts.
“I know all too well the devastation that comes with high-cost credit. The threat of the loan shark. Juggling debts. Robbing Peter to pay Paul.
"It's why I threw my support behind The Sun’s campaign, and it's why I want to see the FCA, and the Government, get on with the job of ending Britain's credit rip-off for good."
Lord Bird, who revealed his mum's battles with loan sharks in an article for The Sun, is introducing a bill which would force lenders to use customers' rental data when deciding whether or not to hand them a loan, in a bid to stop people piling up unpayable debts.
Stella Creasy warned: "Capping rent-to-own charges is a step forward, but yet again we're seeing the FCA play 'whackamole' - looking at individual products and trying to hit them rather than seeing the bigger picture of how these companies evolve to evade regulation.
"Only capping the cost of credit itself will stop this behaviour and truly protect all consumers."
And Rachel Reeves, chair of the Commons' business select committee, told The Sun: "I’m pleased to see that the Financial Conduct Authority is looking to cap the rip-off costs of rent-to-own goods, to stop unscrupulous providers like BrightHouse from creating more misery. They must look to do so as a matter of urgency.
"It’s disappointing that they have not suggested more decisive action to tackle the outrageous costs and exploitation in the doorstep lending market."
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Responding to the FCA's announcement, Treasury minister John Glen said : "We want to do everything we can to help people with the cost of living, and tackling high-cost credit is a vital part of this.
"That’s why we gave the FCA the power to bring in tough new rules – and that’s what they are proposing today.
“It’s often the most vulnerable who get stung by these dodgy deals, and today’s new rules will go a long way in helping people to look after their hard-earned money.”
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