Government proposals to protect vulnerable families from the clutches of loan sharks are “hopelessly misguided” say online data financial comparison site Moneynet.co.uk.
It warns that plans by the government announced last week to encourage the less affluent to save by raising the thresholds under which savings would attract tax designed to help discourage the less well off to resort to extortionate loan shark interest rates will not even begin to work until there is statutory legislation in place to control rates charged for credit.
Richard Brown, chief executive at Moneynet, says: “We do not believe that these initiatives to encourage savings will help the poorest in the community to avoid the sharks.
“The most vulnerable families do not have spare cash to save and will unfortunately always be in danger of falling prey to fringe lenders unless a system of statutory control is introduced.”
Brown also reminds consumers that it is not just the grubby backstreet sharks charging unacceptably high rates.
He says: “Too many of the major high street names are levying rates more than twice those on offer from the most competitive lenders. The base rate is just 4.5% so what can the justification be for charging up to three times that amount for personal loans and other services?
“Store card charging structures also need to be radically reformed. The worst offenders are invariably some of the most prominent names on the high street, and government watchdogs need to properly show their teeth and crack down on these rip off rates otherwise stores like Dorothy Perkins, Dixons and BHS will continue to make enormous profits from rates sometimes in excess of 30%.”