Chamber
Meeting of the Parliament 12 December 2013
12 Dec 2013 · S4 · Meeting of the Parliament
Item of business
Payday Loan Industry (Regulation)
I am sure that many of us in the chamber will have been involved in campaigning against payday loans in our areas. I, too, thank Kezia Dugdale and congratulate her on securing the debate.
I welcome the Financial Conduct Authority’s latest plans to regulate the payday loans industry, which would mean the introduction of stricter requirements, such as affordability checks on the borrower, a crackdown on advertisements, and limiting loan rollovers to two. Although those stricter requirements will go some way towards addressing the issues with the payday loans industry, they are—as the motion says—just the “beginning”; more needs to be done.
Payday loans cause financial misery for many people. The industry is a predatory one that preys on those who are already struggling financially. That can be seen in the influx of people who are going to citizens advice bureaux throughout Scotland to get advice on their increasing debt resulting from payday loans. Those debts get worse at this time of year as people struggle to juggle the financial pressures of Christmas with the rest of their bills.
In Scotland, we do not have to wait for the Westminster Government to take action on the industry; we could and should do more right now. Regulation of the industry is a reserved matter, but we could look at other options, such as working with councils and credit unions to offer alternatives, and establishing a loan guarantee fund in Scotland.
Labour councillor Joe Cullinane is leading the way in North Ayrshire Council. He recently lodged a motion that urged the Scottish National Party council to look into how the council can best support credit unions and promote financial literacy and affordable lending. It is also hoped that the council will consider measures to limit the number of payday lenders, bookmakers and pawnbrokers on our high streets.
The Scottish Parliament and councils across Scotland have the opportunity to work with credit unions. An example of that is the excellent financial inclusion project that is run by First Alliance in Kilwinning, which is funded by the local council and the Scottish Government to offer people an alternative to payday lenders. We could offer extra support to credit unions through a loan guarantee fund, which would allow them to lend to riskier clients on the basis that the risk of default would be borne by the Scottish Government instead of by the credit union. That would allow credit unions to offer same-day credit and reduce risk from defaulters. Perhaps the minister will tell us today what the Scottish Government’s position is on establishing a loan guarantee fund.
I am pleased that the Scottish Government has adopted the wealth warnings that the debtbusters campaign was pushing for, which highlight the dangers of payday loans this Christmas throughout the “12 days of Debtmas”.
However, of course, payday loan companies constantly bombard people with texts and phone-calls to offer them loans. Many people already understand the dangers of payday loans, but they do not know of alternatives for a quick loan. We can and should be offering viable alternatives.
Although we have started to address the problem, we need to accelerate the work with councils and credit unions in order to make sure that affordable alternatives exist, and we need to establish a loan guarantee fund.
12:51
I welcome the Financial Conduct Authority’s latest plans to regulate the payday loans industry, which would mean the introduction of stricter requirements, such as affordability checks on the borrower, a crackdown on advertisements, and limiting loan rollovers to two. Although those stricter requirements will go some way towards addressing the issues with the payday loans industry, they are—as the motion says—just the “beginning”; more needs to be done.
Payday loans cause financial misery for many people. The industry is a predatory one that preys on those who are already struggling financially. That can be seen in the influx of people who are going to citizens advice bureaux throughout Scotland to get advice on their increasing debt resulting from payday loans. Those debts get worse at this time of year as people struggle to juggle the financial pressures of Christmas with the rest of their bills.
In Scotland, we do not have to wait for the Westminster Government to take action on the industry; we could and should do more right now. Regulation of the industry is a reserved matter, but we could look at other options, such as working with councils and credit unions to offer alternatives, and establishing a loan guarantee fund in Scotland.
Labour councillor Joe Cullinane is leading the way in North Ayrshire Council. He recently lodged a motion that urged the Scottish National Party council to look into how the council can best support credit unions and promote financial literacy and affordable lending. It is also hoped that the council will consider measures to limit the number of payday lenders, bookmakers and pawnbrokers on our high streets.
The Scottish Parliament and councils across Scotland have the opportunity to work with credit unions. An example of that is the excellent financial inclusion project that is run by First Alliance in Kilwinning, which is funded by the local council and the Scottish Government to offer people an alternative to payday lenders. We could offer extra support to credit unions through a loan guarantee fund, which would allow them to lend to riskier clients on the basis that the risk of default would be borne by the Scottish Government instead of by the credit union. That would allow credit unions to offer same-day credit and reduce risk from defaulters. Perhaps the minister will tell us today what the Scottish Government’s position is on establishing a loan guarantee fund.
I am pleased that the Scottish Government has adopted the wealth warnings that the debtbusters campaign was pushing for, which highlight the dangers of payday loans this Christmas throughout the “12 days of Debtmas”.
However, of course, payday loan companies constantly bombard people with texts and phone-calls to offer them loans. Many people already understand the dangers of payday loans, but they do not know of alternatives for a quick loan. We can and should be offering viable alternatives.
Although we have started to address the problem, we need to accelerate the work with councils and credit unions in order to make sure that affordable alternatives exist, and we need to establish a loan guarantee fund.
12:51
In the same item of business
The Deputy Presiding Officer (Elaine Smith)
Lab
The next item of business is a members’ business debate on motion S4M-08036, in the name of Kezia Dugdale, on the Financial Conduct Authority’s plans to regu...
Kezia Dugdale (Lothian) (Lab)
Lab
I thank members for staying and draw their attention to my entry in the register of interests, in which I am listed as being a member of the Capital Credit U...
Jamie Hepburn (Cumbernauld and Kilsyth) (SNP)
SNP
I welcome the debate and congratulate Kezia Dugdale on securing it. She has put a tremendous amount of effort into her campaign. I also apologise to Ms Dugda...
The Deputy Presiding Officer
Lab
I remind members that speeches should be three minutes long, if possible.12:47
Margaret McDougall (West Scotland) (Lab)
Lab
I am sure that many of us in the chamber will have been involved in campaigning against payday loans in our areas. I, too, thank Kezia Dugdale and congratula...
Kenneth Gibson (Cunninghame North) (SNP)
SNP
I pay tribute to Kezia Dugdale for her continued pursuit of this matter and for securing today’s debate.With the winter afoot, many Scots find themselves tur...
Gavin Brown (Lothian) (Con)
Con
I congratulate Kezia Dugdale on securing the debate, on the work that she has done on the issue and on the way in which she put forward her arguments today.I...
Graeme Pearson (South Scotland) (Lab)
Lab
I commend Kezia Dugdale for securing the debate and the members of the debtbusters campaign, who have continued to keep the country focused on the issue. I a...
Mike MacKenzie (Highlands and Islands) (SNP)
SNP
In addressing payday loans, it is useful to consider how we got into this unacceptable position. I am old enough to remember when employees got a weekly pay ...
The Deputy Presiding Officer
Lab
Mr MacKenzie, please close now.
Mike MacKenzie
SNP
I suggest that the opportunity for such a game changer will come on 18 September next year.
The Deputy Presiding Officer
Lab
Thank you very much. I would be grateful if members could stick to three-minute speeches13:05
Alison Johnstone (Lothian) (Green)
Green
I thank Kezia Dugdale for securing the debate on this important subject, and for her on-going work on the issue.I, too, welcome the opportunity to raise awar...
Duncan McNeil (Greenock and Inverclyde) (Lab)
Lab
I am conscious of time, so I will be very quick.First, I thank Kezia Dugdale not only for giving us the opportunity to have the debate but for all her good w...
Mike MacKenzie
SNP
Will Duncan McNeil give way?
Duncan McNeil
Lab
No; I will not take an intervention because I am running out of time.
The Deputy Presiding Officer
Lab
You must conclude.
Duncan McNeil
Lab
Payday loans will be an issue irrespective of the constitution. It is not good enough to say to the poor that they should wait until we get independence, as ...
The Deputy Presiding Officer
Lab
Mr McNeil, you must conclude.
Duncan McNeil
Lab
How do we engage those people to deal with the problem that we have here and now?
The Deputy Presiding Officer
Lab
I thank those members who curtailed their speeches, thus allowing me to call everyone. I ask the minister to respond to the debate in a maximum of seven minu...
The Minister for Energy, Enterprise and Tourism (Fergus Ewing)
SNP
I am very pleased indeed to have the opportunity to debate this important topic, especially at this time of year. I thank Kezia Dugdale for giving us that op...
John Wilson (Central Scotland) (SNP)
SNP
Will the minister give way?
Fergus Ewing
SNP
I will in a minute, if John Wilson will bear with me.It is beholden on us all, irrespective of party politics, to do our best with the powers that we have an...
Duncan McNeil
Lab
Will the minister take an intervention?
Fergus Ewing
SNP
I think that I am restricted to seven minutes; otherwise, I would give way.
The Deputy Presiding Officer
Lab
It would be better if Fergus Ewing concluded.
Fergus Ewing
SNP
I apologise to Mr McNeil, but I am under a time order, which I must comply with.The Scottish Parliament has spoken clearly today, as we will next week in Joh...