The FT reports this morning that payday lenders (or legal loan sharks as they are also known) have been flooding into the country looking to take advantage of hard-up recession-hit borrowers and the UK’s lax lending laws. Borrowing at rates of up to 5,000 per cent, customers can find their debts escalating at a startling pace.
Even though many other countries have interest rate caps, the UK has never gone down that route. The government has always said it is wary of implementing such a cap in case it pushes poor people into the hands of illegal loan sharks instead.
Labour MP Stella Creasy has also waged a long campaign to get the government to crack down on these companies, and now her campaign is gaining momentum.