Chorus of crticism of city’s ‘legal loan sharks’

Foyle MP Mark Durkan has hit out at the city’s legal loan sharks, accusing “predatory lenders” of exploiting people’s poverty and difficult circumstances, locking them into escalating rates of extortion.

Durkan’s remarks come as Derry’s Citizens’ Advice Bureau describes a highly worrying increase in the number of people seeking help with crippling ‘pay-day loans’.

Liam Doran, the bureau’s money advice supervisor, said; “Last year, maybe 10% of people coming to Citizens’ Advice were on payday loans. Now that’s 45-50% of people we see.”

Kathleen Bradley, an advice worker at the community group Dove House, said the city’s high-interest lenders “are allowed to make profits off poverty”.

Advice workers describe a vicious circle of increased living costs, increased unemployment, stagnant or declining wages and static welfare payments.

It means that more and more people are turning in desperation to high interest loans to try and cope

with their bills.

Mr Doran told of frequent cases where people on benefits or low in-comes took out an initial loan, then more payday loans to try and meet repayments.

As the loans are ‘rolled over’, the interest rate spirals. Some companies operating in the Derry area are said to charge upwards of 1000% APR in such cases.

Ms Bradley described the enormous financial pressure exerted on poor Derry families under current conditions, particularly when it comes to buying new school uniforms or, most of all, spending on Christmas.

“People at the bottom of society are forced to use door-to-door lenders. A lot of people use this just to get over Christmas and people are paying for it the other 51 weeks of the year.”

Mr Durkan said; “People find themselves locked into this, and all the misery that IT then causes.”

As an adviser trying to negotiate on her clients’ behalf, Ms Bradley said the companies, whose names are well-known in the city, are becoming increasingly difficult to work with.

She emphasised her anger at the injustice of enormous state sup-port for big banks, compared with punishing financial conditions for

those at the bottom.

“The debt at the top will be paid off, but the debt for the wee man will be paid forever and a day.” She called on politicians to take

urgent action to address the prob-

lem.

“The interest rates are extortionate: I can’t believe it’s legal.”

Financial regulation isn’t a de-volved matter - significant changes to the legal framework for high-interest loans can only be made at Westminster.

Although the government has vowed to tighten the rules on credit and store cards, Mr Durkan has accused the coalition of not taking the issue of high-interest loans se-riously. He said the government’s view is that “payday loans aren’t a problem”.

Mr Durkan has joined a campaign led by a London Labour backbencher, Stella Creasy MP, to outlaw the worst excesses of the system.

He also emphasised the need for strengthened, broadened credit unions to help those most in need.Mr Doran of the CAB urged peo-ple in difficulty to get in contact: free, trained advisers are available.