‘Immoral’ pay-day loan websites banned from public libraries

By FRANK URQUHART
Published on 20/12/2012 00:35

A SCOTTISH council has blocked access to online pay-day loan companies from its computers, including those in libraries and community centres.

Dundee City Council is believed to be the first local authority in the country to take action against pay-day lenders.

One in ten people in the UK is believed to have taken out a short-term loan – with many people likely to turn to them to pay for Christmas.

Council leader Ken Guild said: “I am hoping other councils will follow suit. What these companies are doing may not be illegal but it is certainly immoral.”

Some short-term loan companies charge interest at an annual percentage rate of 4,000. People who fail to pay back their loans can end up with a debt far higher than the amount borrowed.

In an attempt to stop people being tempted to borrow more money, the council has blocked more than 100 internet sites which offer pay-day loans as part of its anti-poverty strategy. Mr Guild said: “We are trying our best to block access to these sites which promise solutions to people that bring only more misery and heartache. There has been an explosion in this type of site recently and we are trying our best to keep up with this.”

Gregg McClymont, MP for Cumbernauld, Kilsyth and Kirkintilloch, said the move showed the growing anger against the loan companies.

He said he was also concerned about the level of internet security offered, which could open people up to the threat of fraud.

“Putting a cap on the rate of interest these companies are allowed to offer is the least which should be done,” he added.

A spokesman for Citizens Advice Scotland said staff were seeing 50 new cases a day of people struggling to pay back unsecured personal loans.

He said: “The way pay-day lenders currently operate is very poorly regulated, and as a result we see huge numbers of people getting into unmanageable debt.

“We want to see much tighter regulation, aimed at protecting consumers. We also want to encourage people, if they have to borrow, to shop around and find alternative lenders who won’t charge such high interest rates.”

Russell Hamblin-Boone, chief executive of the Consumer Finance Association, which represents 70 per cent of pay-day lenders in the UK, said: “Dundee City Council is free to block whichever sites it wishes from its employees’ computers, but to also do so on public ones in community centres and libraries is denying local residents access to short-term, flexible credit.

“Pay-day loans are increasingly popular and responsible lenders such as the CFA’s members operate by a strict code of conduct which protects consumers.”