One of the members of the Scottish Parliament, Margaret Burgess, has spoke up in a Parliamentary sitting in support of a motion she tabled demanding action against what she regards as socially damaging instant cash loan companies.
Ms Irvine, the MSP for Irvine, was taking part in a debate in the Scottish Parliament which had been called to discuss her motion. The motion had already received support from a cross section of parties in the Parliament. She said that many instant cash loan companies were demanding very high interest rates – up to 4000% was quoted – with the companies taking advantage of the misfortunes of people across Scotland.
Ms Irvine explained to the Parliament the mechanism of the instant cash loan principle, whereby those who had agreed to the conditions of cash loans or supposed short term loans by allowing access to their bank accounts. The terms and conditions of the loans required authorisation to be able to make withdrawals form the borrower’s account.
The amount borrowed normally had to be paid back in full, which means the amount borrowed plus the interest on the next pay day. Ms Irvine thought that the loan soon turned into a simple way to access somebody’s bank account and take out money.
The MSP used to work as a manager of a citizen’s advice bureau, so presumably had had plenty of first hand experience of people who had got into difficulties with instant cash loans and short term loans given out by these companies.
She went on to explain that many people who took out this type of loan never managed to get out of debt because their original debt simply got rolled over to the next pay day. In fact, rather than borrowing their way out of trouble, they were digging themselves further and further into a debt hole.
She thought that the whole instant cash loan industry should be monitored and regulated more effectively by the UK government and other options to borrowers who were experiencing short term financial problems should be explained more obviously.
Her advice to those people who were contemplating taking out an instant cash loan was to avoid doing so and think of the other options which were available.