GIL Paterson has backed calls to tighten the regulations around “payday loan sharks”.
It follows the publication of a report from the UK’s largest debt advice charity that found regulations had “not fixed” the payday lending market.
The charity insisted some payday loan providers still do not engage in best practice.
Mr Paterson told how an independent Scotland – or with the devolved controls – would have clamped down on payday loans.
Last year, 11.8% of those who contacted StepChange Debt Charity from the Clydebank and Milngavie constituency had a payday loan debt, with their average payday debt balance at £885.40.
Although the charity has reported less and less people seeking help with payday debt, those who are turning to payday do not always get a fair deal.
Mr Paterson said: “Payday loans are a curse on poorer areas of my constituency and trapping the poor and working poor in financial bedlam.
“People in Clydebank and Milngavie, and across Scotland, are being snared in a cycle of repeated borrowing as their balances continue to mount – along with this comes stress, anxiety and even suicide.
“The Financial Conduct Authority has to tighten the rules to combat payday loan sharking the treatment of people in financial difficulty, for the good of our most vulnerable citizens.
“Unfortunately, the powers to regulate this industry rest with the UK Government. If it were a devolved matter, I am sure the Scottish Parliament would have taken radical action to end this injustice.”
James Stewart, StepChange Debt Charity Scotland’s public affairs officer said: “Regulation can make a significant difference to broken markets and FCA action over the last few years has gone some way to fixing the worst excesses of payday lending, but there is clearly still work to be done.
“It is essential that the FCA review of the payday lending cap is broad enough to fix areas of consumer detriment and poor lending practices. There is also a clear and immediate need for the Government to examine more affordable forms of borrowing for financially vulnerable people, who are often left with nowhere else to turn in their hour of need.”
Notes to editors
Payday lending is covered by the provisions of the Consumer Credit Act 1974, including the requirement to have a consumer credit licence issued by the Office of Fair Trading (OFT). The subject matter of the Consumer Credit Act 1974 is reserved to Westminster under Schedule 5, Head C7 of the Scotland Act 1998. The Scottish Parliament therefore has no power to act in this area.
Proportion of clients with payday loan debt23%16%
Proportion with three loans or more41%37%
Number of people with payday loan debt75,000 (full year)28,000 (half year)
About StepChange Debt Charity