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Welsh Assembly criticises payday loans

By Sarah Engle, Thu 26 Jan 2012 - Published in Loans

Payday loans companies have been criticised by members of the Welsh Assembly for "sucking money" from the poor across the country.

Firms offering high-interest bonds have come under scrutiny in recent weeks due to the "irresponsibility" of the style of lending. Wonga, a major short-term lender, has been criticised recently after it encouraged students looking to reduce the amount debt they had over the course of their studies to use the scheme.

Now the Welsh Assembly has attacked the companies for targeting poor and vulnerable communities to take out loans they will struggle to pay back.

Simon Thomas, Plaid Cymru assembly minister, has called for there to be a cap on the high-interest loan which can be well over 1,000 per cent APR.

He said in a debate at the Senedd: "Adverts concentrate on the quickness and simplicity of the lending, the amount paid back is talked about in terms of £20 and £30. It's hard for a consumer to make a choice based on the real interest rates."