Nick Smith MP Labour MP for Blaenau Gwent
Nick Smith MP has called for the Financial Conducts Authority to protect Blaenau Gwent families after they seemingly ruled out a cap on extortionate interest rates.
The Blaenau Gwent MP has been campaigning for the FCA to find a solution for a fairer rent-to-own sector as companies like Bright House charge sky-high interest rates on vital household goods.
For example, last week in the Ebbw Vale store a £298 cooker was being sold on a three-year plan for £702.
Mr Smith has previously called for the Prime Minister to support the FCA in taking action against the worst offenders in the sector.
But the FCA report into the sector said a cap would not be effective if shops could just jack up the price of goods -; a stance they have confirmed in response to Mr Smith last week.
The FCA now aims to consult in Spring 2018 on proposals concerning overdrafts and other forms of high-cost credit.
Speaking after the response, Mr Smith said the FCA must not be allowed to drag their heels when ordinary families are paying the price,
“They say dealing with the problems in this sector is a priority, but then say it’s going to be next spring before they even aim to consult on what to do about it”, he said.
“This just isn’t good enough. The eye-watering costs these firms sell household goods for mean crippling repayment fees for struggling families just trying to furnish their homes.
“I’m going to be meeting with Citizens’ Advice to talk about the ways we can work together on this, and am arranging a meeting with the FCA’s Executive Director to ask why it’s taking so long for them to take action.
“We need to get to the bottom of this and we need the FCA to take action -; and soon.”
Mr Smith has previously campaigned for ethical credit options such as credit unions when he revealed payday loan companies like Wonga were lending Blaenau Gwent £1m a year.
At Labour conference, Shadow Chancellor John McDonnell also announced that the party would put a cap on the total interest anyone can pay to a credit card company.
“The Shadow Chancellor is right to recognise that household debt is threatening to derail the economy, and I am glad to see Labour would take steps to tackle this problem”, said Mr Smith.
“I hope the FCA keep this at the forefront of their minds when they look again at the rent-to-own sector.”