YOUR MP WRITES: Islwyn MP Chris Evans
4:02pm Monday 30th September 2013 in News
Helping credit unions thrive - Earlier this month, I led a debate in Parliament on high cost credit where I called on the government to restrict the advertising budgets of payday loan companies.
Unlike the tobacco and gambling industries, high street lenders face no restrictions on when they can promote their products.
This enables loan sharks to target their services at day time audiences – those more likely to be unemployed, elderly or studying.
It seems to me that high cost lenders are expanding into new markets, targeting customers who previously would have borrowed money from friends and family.
In recent years I have noticed companies adopting a very aggressive advertising strategy. In the past 12 months payday lenders have invested some £35 million on promoting their products.
It is no wonder that charities such as the Citizens Advice Bureaux are reporting a 555% increase in the number of people in Wales asking for advice about payday loans.
With the short term credit industry now estimated to be worth more than £2.2 billion, it seems to me that payday lenders have become a first-stop shop for anybody who needs instant access to money.
What is concerning is that the more these loans are advertised, the more people will see them as a mainstream solution to their financial problems.
That is why I was so proud to join local Councillors, and my predecessor Lord Touhig, at a packed launch at the historic Cwmcarn Institute as Islwyn Community Credit Union expanded their services.
Staffed by volunteers, the Islwyn Community Credit Union does excellent work informing people across the constituency that there is another way with credit unions.
But faced with the massive advertising budgets of payday loan companies there is only so much they can do.
In order for credit unions to thrive more has to be done to ensure they are competing on an even playing field.
It is my hope following the debate that the government will look at introducing restrictions on the amount high cost credit companies can spend on promoting their products.
If we are serious about tackling the problem of high cost credit we have to begin promoting the alternatives.
For me, the credit union movement is just the place to start.
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