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Wirral councillor urges action to drive pay day lenders out of business
A senior Wirral councillor is on the warpath against pay day lenders.
Councillor Stuart Kelly has called for the local authority to throw its weight behind the Archbishop of Canterbury’s campaign to “drive the lenders out of business.”
He wants council colleagues to study measures that can be taken to contribute to the archbishop’s initiative to build up credit unions to help people tackle their financial problems – and cold-shoulder pay day lenders.
There are around 240 pay day loan firms operating in Britain and even the cheapest among those charge interest of around 1,700% APR.
More typical rates, including those charged by market leaders, are in excess of 4,000%.
According to the Consumer Credit Counselling Service, payday loans are used by 1.2m people in Britain every year.
Liberal-Democrat Cllr Kelly said: “The Archbishop is clear in his intention and I think local authorities like Wirral can contribute to making his campaign a success”
His motion to next Monday night’s council meeting also looks at other ideas to deal with the financial squeeze felt by many residents.
He commented: “In today’s world access to financial and banking services are essential.
"People who are financially excluded have problems gaining employment where wages may need to be paid into a bank account.
“ They can’t access deals where discounts are available for direct debt payments, and everywhere we go now cash is slowly being replaced by plastic.”
“The lack of mainstream financial access often drives people into the world of the pay day lender.”
Councillor Kelly continued: “I am looking to promote credit unions through this motion by working with the Church of England, but also looking at ideas from other parts of the country.
“ For example Glasgow Council is planning to deposit a small sum into new credit union accounts for each of its secondary school students.
"I can’t imagine a more practical example of promoting a responsible approach to savings and banking than this and I ask is this something that Wirral can also think about doing.”
“I am also looking at the spread of ATM machines in Wirral particularly those which charge to withdraw cash - effectively a tax on withdrawing money.
"These machines tend to be in areas where people can ill-afford to pay a levy on top of everything”
In a recent statement, one of the UK's most prominent lending companies, Wonga, said: “His (Archbishop Justin Welby) comment that he wants to ‘compete Wonga out of existence’ has been interpreted by some as meaning we are an unacceptable business.
“Some have taken it a step further saying we make unaffordable loans to the most vulnerable in society.
"We respectfully disagree.”
They claimed the lender was “part of the changing financial landscape of Britain” and acknowledged credit unions also had an important role to play.
The statement added that Wonga, which had more than one million active customers, pledged to help those in financial difficulty and showed people the full cost of the loan “up front.”
The firm said it has “responsibly” lent more than £2bn over the last six years, despite turning down three-quarters of all first loan applications.
Earlier this year websites offering the high-cost loans were added to a blacklist of banned sites on Wirral Council computers.
The blackout covered not only the council's staff, but also computers made available for public use in libraries.
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