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Its time to crack down on high interest home credit and payday lenders

[15/02/2011 | No comment]

One of the issues I’m increasingly concerned about is the number of my constituents who are getting into debt by taking out loans with extortionate interest rates.

By the time they talk to me, they are desperate for help. That’s why I was dismayed to learn that Leicester Money Advice, which offers free help to people struggling with debt, is under threat of closure because the Government has cut its funding.

This doesn’t make financial sense. If people lose their homes, or end up in court, it costs us all in the long run.

Thankfully, the Government looks set to do a U-turn on this important issue.

Specialist Debt Advisers who work at Leicester Money Advice and our Citizens Advice Bureau could be saved, if the Government makes good on its promise to continue funding them for another year.

There is much more we should do to help prevent people getting into debt in the first place.

We need to crack down on illegal loan sharks and to cap the costs of credit – which is why I recently voted for MP Stella Creasy‘s bill to restrict the total amount people can be charged for a loan.

We must make affordable credit available to people on low incomes and those who can’t get a bank account, by support credit unions like Leicester’s Clockwise.

We also need to help prevent people understand how to better manage their money, including by improving financial education in schools.

There is a lot of support across the political parties for these measures. I hope this is one area where MPs can work together to make real progress in preventing the terrible problems many people face when they get into debt.

To read Liz’s full article on helping to prevent people getting into debt click here.

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