A group of campaigners from national community organising charity, Citizens UK, welcomed in the New Year by gathering, in an array of caps, and religious headgear, at the London base of pay day lender, Wonga, to welcome the coming into force of the Financial Conduct Authority’s price cap on the cost of credit and calling upon Wonga to make a public declaration that they will respect the new cap and abide by its spirit.
Now the cap on credit has been achieved, the group is asking Government, in the lead up to the election, to establish a community finance fund, paid for by fines levied on banks and pay day lenders.
Citizens UK were the first organisation to call for a cap on credit back in July 2009 in the wake of the financial crisis. They made an interfaith call to prohibit usury, appealing to teachings in the scriptures of the Muslim, Jewish and Christian faiths.
This was followed in November 2009 by a 2,000-person London Citizens Assembly, in which a cap on interest rates was proposed to Financial Secretary to the Treasury, Stephen Timms MP, alongside his opposition counterpart Greg Hands MP, and Lib Dem Treasury spokesperson Vince Cable MP. Then, in the May 2010 Citizens UK General Election Assembly, the same proposal was put to the three main Party Leaders, with David Cameron, pledging to investigate the possibility of such a cap. The implementation of the cap today marks the outcome of that pledge.
Wonga are not only the most high-profile payday lender in the UK, but have also gone through a series of recent scandals in the last year, including the revelation that they sent fake legal letters to their customers. They have recently announced that they are planning to charge the maximum amount allowed under the new regulations. Citizens UK will therefore be asking Wonga to make a public declaration that they will respect the new cap and abide by its spirit.
Bishop of Stepney, and Citizens UK Trustee, the Rt Revd Adrian Newman said: “Today sees the hard work and tireless campaigning of many groups, including Citizens UK, bear fruit as the usurious rates used by a raft of payday lenders are capped.
“Debt and money worries are a real issue for countless families across the country. We hope that the introduction of the cap on credit charges will help halt the cycle of debt that can so easily happen when using the services of some pay-day lenders.
“We know that people will still need to access short term loans. That’s why we have committed to promoting local credit unions, pledging to sign up 10,000 new members over the course of the next parliament and asking Government to establish a community finance fund, paid for by fines levied on banks and pay day lenders.”
The rise in the number of pay-day lenders on the high street, combined with an increasing call from the Citizens UK membership that their wages, and those of their neighbours, simply aren’t keeping pace with the cost of living, secured the campaign to call for a cap on credit; establish a community finance fund; and promote credit unions to be a key focus of their People’s Manifesto. The organisation is also calling for improved social care provision and an end to indefinite detention for immigration purposes.
Colleen Beasley, Citizens UK member from St John’s Church in Hoxton, said: “I became involved in the campaign for a cap on credit because I myself was a victim of these charges. It’s an embarrassing situation to find yourself in, but the relentless charges and fees meant my original, relatively small debt quickly spiralled out of control.
“Being in debt and knowing that the debt is growing is a frightening and frustrating experience, I felt powerless to tackle it. That has a serious influence on your confidence and general well-being. Thankfully good friends were able to help me.
“I’m now a member of my local credit union, and would advise anyone to join one. Many credit unions offer pay day loans, and if you don’t need one, then at least you know your money is being used ethically.”
Citizens UK, with partners, Church Credit Champions Network, are running a series of Credit Union sign-up sessions, encouraging more people to join their local Credit Union.
David Barclay, Church Credit Champions Network, said: “We’ve come out to Wonga HQ in our array of caps to both celebrate the new regulation coming in to force, but also as a reminder to all pay day lenders that civil society will be keeping a close eye on the high street lenders in their communities to ensure they follow the new guidance."
Also here’s some links to news coverage of our action: