Islington cracks down on the borough’s loan sharks
- Credit: Archant
Council insists payday lending shops are not welcome in Islington
A major project tackling payday lenders has led to the closure of two payday loan shops by Islington council.
As part of a two-year operation, planning officers found that two branches of The Money Shop, in Seven Sister’s Road and Chapel Market, did not comply with the necessary planning regulations to operate lawfully.
With co-operation from The Money Shop, these branches were closed by thecouncil.
The closures come as part of a wider effort in curtailing payday lenders in Islington amid concerns that the loans come with high interest rates and additional fees that could plunge the financially vulnerable further into debt.
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Currently, Islington has the fourth highest concentration of payday loan shops in the UK, particularly in the Nag’s Head and Finsbury Park town centres – some of the borough’s most deprived areas.
Investigations into the practices of payday lenders have been undertaken by the Financial Conduct Authority in recent months and the regulation surrounding them has become much stricter.
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New laws have been passed which cap the total amount borrowers must repay to no more than double the amount originally borrowed, as well as limiting the interest per day to 0.8 per cent.
Borrowers are now also protected by the Continuous Payment Authority (CPA).
The council has now launched an eight week consultation on how Islington can stop the spread of payday loan shops and protect the financial wellbeing of residents.
Based on counts conducted two years ago, there are now 16 payday lending shops in the borough following the most recent closure of the two Money Shop branches.
Cllr Andy Hull, Islington Council’s executive member for finance and performance, said: “Our action against payday lenders operating without planning permission is good news for Islington and for the hard-pressed families struggling with rising bills and high rents on whom these legal loan sharks prey.
“We are now consulting on further steps to make it harder for payday lenders to set up shop. They are not welcome in our borough. Payday loan companies should know that Islington is no soft touch.”
And the council have taken their crusade against payday lenders to the streets as staff and other members of the Islington Debt Coalition campaigned outside Finsbury Park station last Thursday morning to warn of the dangers of loan sharks and other short term lenders.
Islington plans to introduce further measures to limit payday lenders including ‘buffer zones’ to determine whether new loan shops could open weighed up against their impact on the economic health of other businesses on the high street and the likelihood of residents getting into debt.
Payday lenders will also have to display their charges and interest rates to debt advice services.