The Government is poised to regulate the payday loans sector unless it creates a robust system of self-regulation.
Labour peer and Consumer Credit Counselling Service chair Lord Wilf Stevenson has pledged to lodge an amendment in the Financial Services Bill committing the Government to take action within a year.
The amendment was originally rejected in the Commons but Lord Stevenson is confident that changes to the Treasury team may see it accepted.
Speaking at a fringe event at the Liberal Democrat conference in Brighton yesterday, Lord Stevenson said: “Now we have personnel changes so maybe when we put down the same amendment in the Lords the Government will be able to accept it. The amendment calls on the financial authorities to come up with a scheme for regulating high-cost loans, or payday loans, within a year.
“The truth is that the people who earn least in our society have the most need to have access to short-term borrowing such a payday lenders so they can just get through the year.”
Speaking alongside Lord Stevenson, deputy chief whip Lord Dick Newby said the Government is ready to act.
He said: “Payday loans are a problem and the sector has said it will produce a code of conduct which will protect individuals from abusive behaviour by them.
“The Government’s view is that if they can do it quickly then that is fine but if they don’t then something will have to be done in this area. Self-regulation is good if you can get it but the track record of self-regulation is mixed.”