Moneynet warns government intervention insufficient against loan sharks
Savings proposals to protect the poor from predatory loan sharks doomed to failure unless statutory interest rate controls on credit are introduced, warns moneynet.
PR9.NET October 10, 2005 - New government proposals to protect vulnerable families from the clutches of loan sharks are 'hopelessly misguided,' according to online data financial comparison site Moneynet.co.uk. The Government announced new savings plans last week which are designed to encourage the financially-disadvantaged to start saving, by raising the threshold on which they would pay tax. This move was designed to discourage households with the lowest incomes from borrowing from loan sharks.
Richard Brown, Chief Executive of moneynet, did not believe the measure would be effective until statutory legislation was in place to control rates charged for credit. "We do not believe that these initiatives to encourage savings will help the poorest in the community to avoid the sharks," he warned. "The most vulnerable families do not have spare cash to save and will unfortunately always be in danger of falling prey to fringe lenders unless a system of statutory control is introduced."
But Brown also reminded consumers that it is not just the grubby backstreet sharks charging unacceptably high rates, "too many of the major High Street names are levying rates more than twice those on offer from the most competitive lenders. The base rate is just 4.5 per cent – so what can the justification be for charging up to three times that amount for personal loans and other services?"
"Store card charging structures also need to be radically reformed. The worst offenders are invariably some of the most prominent names on the high-street, and government watchdogs need to properly show their teeth and crack down on these rip off rates – otherwise some of the biggest names in the UK retail market will continue to make enormous profits from rates, sometimes in excess of 30 %," added Brown.
Moneynet introduced a downloadable loans guide for consumers earlier this year in response to consumer confusion over loans and credit borrowing.
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Moneynet.co.uk is the UK’s most established personal finance research and data website. The company offers consumers a wide range of low cost financial products: from mortgages and personal loans; to car, home and medical insurance; credit cards; savings accounts and best-buy fixed rate products. Moneynet.co.uk is an ethical, impartial and comprehensive source of consumer finance information, covering the whole of the personal finance sector.
Moneynet was founded in 1997 by Chief Executive Richard Brown to simplify the personal finance market and provide consumers with impartial and interactive information on financial products and services.
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