To ask the Minister of State, Department for Business, Innovation and Skills what recent representations he has received from (a) consumer bodies and (b) other organisations (i) in support of and (ii) against the introduction of a cap on charges in the home credit market; and if he will make a statement.
With regard to contact with those supporting a cap on interest rates, I met with Damon Gibbons of Debt on your Doorstep and my right hon. Friend Mr. McCartney in October 2009. Damon Gibbons also wrote to me in November 2009 and in January, Joanna Kennedy of the Zacchaeus 2000 Trust emailed my constituency office. With regard to contact with those against introducing a cap on interest rates, John Moulding of Provident Financial wrote to me in November 2009.
Government carefully considered the case for a cap on interest rates following research carried out by Policis in 2004. The research showed that imposing a cap on interest rates could result in lenders withdrawing from the riskier end of the market, including the home credit market, denying vulnerable consumers access to legitimate sources of credit and potentially forcing them to resort to illegal money lending. This was a view shared by leading consumer groups including Citizens Advice, the Association of British Credit Unions, the Institute of Public Policy Research, Which? and Advice UK. The Office of Fair Trading is reviewing the high cost credit market, including the case for a rate cap, and will report shortly. Government will respond to the review when published.