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Payday loan crackdown promised in Brighton and Hove
Takeaway leaflets offering families meals on a buy-now-pay-later basis at sky high interest rates are being posted through hard-up people’s doors.
The news comes as Brighton and Hove City Council vowed to crack down on payday loan firms and lenders who are “preying” on those struggling in the difficult economic climate.
With thousands of people across the city believed to have been pushed to borrowing to get by, councillors have vowed to look into whether it can limit the number of firms operating in the city’s high streets.
Green councillor Bill Randall said he had been informed there was a take-away operating in Whitehawk offering meals on credit at an “an extortionate rate of interest”.
He added there was also a case in Moulsecoomb of a resident getting an online loan from Wonga to buy an energy key for their property over the weekend.
Coun Randall said: “The signs of the poverty and financial exclusion that corrode our community can be seen across the city in the blossoming number of money shops offering payday loans and in the swelling queues at Fareshare food distribution points.”
Payday loans offer a relatively small amount of capital for a short term.
There are no restrictions on the interest rates companies can charge, although they are required by law to state the effective annual percentage rate (APR).
Labour councillor Chaun Wilson said about 5% of households across the city are dependent on payday loans.
Coun Wilson said: “For many people these are desperate times and payday lenders use whatever means they can to encourage increased borrowing.”
The council is to set up a scrutiny panel to look at how it can limit the number of payday loan firms in the city.
It has already set aside £300,000 over next two years to provide commu- nity banking advice to those that need help.
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