Alba call for new “Anti-Usury” Law to save consumers from “Debt Trap” Lenders
Alba want a ceiling put on the amount of interest consumers can be charged
Alba Party have called for a ceiling to be put on the amount of interest consumers can be charged in a bid to combat pay day lenders and banks cashing in on the cost of living crisis.
According to the Office of Budget Responsibility (OBR) in end of 2022-23 and 2023-24, living standards are set for the largest fall on record.
A combination of high inflation, low wage growth, increase costs and higher interest rates will mean that disposable income will be greatly reduced for households across the country. Around 4 million households in the UK are likely to face higher mortgage payments in 2023.
Alba Party Depute Leader Kenny MacAskill MP says that “ with household budgets under severe pressure, disposable income has never been in a more precarious position”.
MacAskill wants the UK Government to tighten legislation to stop rogue lenders taking advantage of the bleak financial outlook.
Many countries across the world have anti Usery Acts which make it unlawful to charge unfair interest rates to lenders. In the UK the last Usery Act which was given Royal Ascent by King Charles ii in 1660 was scrapped in 1854.
In the United States Usury laws are state-specific laws that set forth limits for interest rates in specific types of lending instruments to prevent lenders from imposing unreasonable or predatory interest rates.
In the run upto Christmas the average rate across all types of credit cards including fees in the UK hit a new high of 30.3%.
Last year, 4.4 million people across the UK borrowed money to make ends meet, according to figures from StepChange and this figure is likely to rise sharply in 2023.
About 71% said using credit had negatively affected their health, relationships or ability to work, while two-thirds said they were only able to keep up with payments by skipping housing or utility bills, or cutting back to the point of hardship, putting them at risk of further financial harm.
Alba Party want to see action from the UK Government to ensure that the cost of living crisis does not lead people into an inescapable “debt trap”.
Commenting Alba Party Depute Leader Kenny MacAskill MP said:
“The cost of living crisis is having a disproportionate impact on the poorest members of our society. People with the lowest incomes pay the highest energy costs and the pay the highest borrowing costs.
“With Credit Card interest rates at all time highs and household disposable income hitting new lows, the UK Government must act to ensure that millions of people don’t get stuck in a debt trap they will never be able to escape from.
“There is a particular concern over pay day lenders who people denied credit from high street lenders may turn to. It is completely immoral that they are legally allowed to charge astronomical interest rates. This is a situation that must be addressed and the UK Government must act now to do so.”