Grant Shapps has warned that the poorest in society are paying up to 10,000% APR on Payday-style loans.
The lack of competition within the Home Credit Market has lead to extortionate APRs, with loan rates ranging from 100% to a staggering 10,000%.
A typical Payday loan might see someone borrowing £200 but paying back £300 just a couple of months later - at a whopping 1576.6% APR.
Grant, the Shadow Housing Minister, said, "As the Bank of England slashes interest rates close to zero, we think it is obscene that anyone should end up paying 10,000% APR, particularly when the evidence suggests that these loans are targeted at some of the most vulnerable members of our society."
And he announced a series of practical measures to combat the growing problem of exploding
- Create more competition in the Home Credit Market in order to bring down APR rates
- Encourage the greater use of credit unions
- Create a free National Finance Advice Service
For more information, read the 'Payday for Loan Sharks' report.