A feasibility study around the introduction of a no-interest loan scheme, an alternative to short term high cost credit has today been launched by Chancellor Philip Hammond.
In the Budget 2018 Red Book, it stated “for some people, even borrowing from social and community lenders can be unaffordable”.
“Therefore, the government, working with leading debt charities and the banking industry, will launch a feasibility study to help to design a pilot for a no-interest loans scheme early next year.”
Consumer Campaign Group debt hacker, Alan Campbell, said: “The government seems to be finally waking up to the fact that millions of Brits have been sold unaffordable high-cost loans and are trapped in a spiral of debt. But the proposal to conduct a feasibility study on an interest-free loan scheme could be too little too late.
“This government needs to deal with the root of the problem; the credit industry has been getting away with breaking the rules and selling unaffordable loans to vulnerable people for years.
“The best way to stamp out these practices once and for all is for government to firmly enforce the existing affordability rules. While the regulator has been asleep at the wheel, some borrowers have taken matters into their own hands, and their complaints about unaffordable loans helped bring down Wonga.
“Now it’s time for more borrowers to be empowered to exercise their rights, and the rest of the payday lenders held to account.”
A consultation into a ‘Breathing Space’ scheme was also announced by the Chancellor today to help people in problem debt for a number of years. This is aimed at giving people protection from interest, charges, collections and enforcement action whilst they seek debt advice, and whilst repaying their debts.
The scheme will introduce a 60-day period of protection from creditor action to recover debts to help people make plans to pay back their debts in a sustainable way.
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