The government’s action plan to tackle debt does not crack down hard enough on lenders charging extortionate interest rates, a financial pressure group has said.

Legal doorstep lenders, who often target the poorest customers who cannot borrow from high-street banks, charge up to 164% interest.

But the over-indebtedness strategy launched by the Department of Trade and Industry on Tuesday does not set a cap on interest rates.

Pressure group Debt on our Doorstep, which includes Oxfam, the YMCA, Church Action on Poverty and the New Economics Foundation, welcomed the measures but said they needed to go further.

Damon Gibbons, chair of Debt on our Doorstep, said: “As well as supporting affordable credit, the government must use legal measures to control the burgeoning business of legal loan sharks.”

The DTI report also proposed a new helpline for debt advice plus measures to boost access to affordable credit and to improve financial literacy and housing and council tax benefit administration.

It proposed changes to the much-criticised social fund budgeting loan for poor families, which offers money for basics such as furniture and clothes.

Source

Housing Today