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Reform of Consumer Credit industry

Reform of Consumer Credit industry
Interesting proposals for the reform of the Consumer credit industry have been set out in a new report from think tank IPPR.The report claims that a one-off levy of £450 million on Britain’s £180 billion consumer credit industry could create enough affordable lenders to take on Britain’s legal loan sharks.It also says that as well as a new legal cap on the total cost of credit, Britain needs a new generation of not-for-profit affordable lenders with enough capital liquidity and geographic coverage to compete with the main payday lenders.According to the report, not-for-profit lenders and credit unions could be hosted in a variety of locations, such as Post Office branches, and that £450 million of capital could support over one and a half million loans of up to £250 at any one time.Lenders should charge a maximum of 3% per cent a month, or 42.6% APR, says the think tank. This would mean that borrowing £100 for one month under this new plan would cost just £3, compared to a current cost of over £30 with a similar loan from one of the country’s main money lenders.IPPR also argues that payday lenders should:

·     Provide a clear ‘pounds and pence’ cost for any potential loan, plus the payment rate and the term length.

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