It doesn't take long sat in front of the TV to see adverts for so-called Pay Day loans with interest rates of up to 2500%. Who would take out a loan at such interest rates? The answer to that is easy-desperate people with nowhere else to go.
If you haven't got much money and need some credit there aren't many options and sky high interest rates may well ensure you never get out of debt. Defaulting can mean the loan being sold off to other lenders and thats when things can get really nasty.
I did some work with a parliamentary candidate some time back on establishing a cap on interest rates and the feed-back from the treasury was that the arguments were very evenly balanced. I remember saying at the time that if the arguments are evenly balanced then why not just do it-take the side of the people and not the extremist wing of the Finance industry.
That's why I was glad to recieve a model resolution from Compass advocating a cap on interest rates and the creation of a "Peoples Bank" based on the Post Office and existing Credit Unions to provide affordable loans.
I will certainly be supporting the resolution and hope it makes it to the Conference Agenda.
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