Payday lending levy will not cull loan sharks

Commenting on the Chancellor of the Exchequer’s announcement that the Government plans to tax payday lenders in order to fund the work of the Illegal Money Lending Team which tackles loan sharks, Russell Hamblin-Boone, Chief Executive of the Consumer Finance Association which represents some of the best known short-term lenders in the UK, said:

“The Chancellor is wrong to conflate illegal money lenders with legitimate, regulated payday lenders. All credit providers have an obligation to tackle illegal lending so any levy to fund the important work by the Illegal Money Lending Team should apply across the entire consumer credit industry. To tax payday lenders alone is completely unjustified and will be wholly ineffective as short-term credit now accounts for less than 1% of unsecured personal borrowing and lending has decreased by more than 70% under FCA regulation. Further restrictions on access to legitimate short-term loans will drive even more people into the arms of the very loan sharks that the Government is seeking to tackle.”