16 Jul 2015

Islington Council takes action over payday lenders

Action by Islington Council has led to the closure of two payday loan shops in the borough, and now the authority is consulting on new rules to make it harder for more payday lenders to open up shop.

In a two-year operation, planning officers from the council checked that payday lenders in the borough had the  planning permission in place to operate lawfully.

They found two shops did not have the relevant planning permission, and, following advice from the council, both premises agreed to close.

The project formed part of a concerted, council-wide focus on tackling payday lenders in Islington, amid concerns that the loans they offer can come with high interest rates, charges and fees that drag customers deeper into a cycle of debt.

As its next step, the council has now launched an eight-week consultation on how Islington can prevent the proliferation of payday loan shops and protect residents in the long-term.

Cllr Andy Hull, Islington Council’s executive member for finance and performance, said: “Our action against payday lenders operating without planning permission is good news for Islington and for the hard-pressed families struggling with rising bills and high rents on whom these legal loan sharks prey.

“Payday loans are a very expensive way of borrowing money and Islington Council has been at the forefront of national efforts to direct people to better alternatives, such as credit unions, and to free advice, while regulating the loan shops already on our streets.

“We are now consulting on further steps to make it harder for payday lenders to set up shop. They  are not welcome in our borough. Payday loan companies should know that Islington is no soft touch.”

The consultation on measures to regulate the number and location of payday lenders is part of a proposed supplementary planning document (SPD).

The SPD reveals that Islington already has the fourth-highest geographical concentration of payday loan shops in the UK.

Their impact  is amplified because they are concentrated in or near the borough’s most deprived communities – half of them are situated in the Nag’s Head and Finsbury Park town centres.

One of the draft SPD’s proposals is for all new payday loan shop applications to be considered against the risk of over-concentration and the negative effect this would have on the economic health of the surrounding high street – and on the likelihood of residents getting into problem debt.

‘Buffer zones’ would also be used to assess the impact of any new outlet, making it harder for them to cluster together or operate near betting shops.

Payday lenders will also be required to display their fees, charges, interest rates and pointers to debt advice services and to London Capital Credit Union – a low-cost alternative to using payday lenders, which also receives financial support from the council.

The consultation also looks at similar measures to combat the over-concentration of fast food outlets and betting shops. To take part in the consultation, visit www.islington.gov.uk/SPDs.

Meanwhile, council staff and partners on the Islington Debt Coalition were campaigning outside Finsbury Park station during the morning rush hour today (Thursday, July 16) to warn commuters about the dangers of using loan sharks and payday lenders.

If you have money worries, contact the Islington Advice Line on 03444 889 626. This free, independent and confidential help is provided by Islington’s Citizens Advice Bureau, Islington Law Centre and Islington People’s Rights. For more help and advice, see www.islington.gov.uk/moneyadvice. For more information on Islington Credit Union, see www.credit-union.coop or call 020 7561 1786.

Notes to editors

Attached: Photo of Fit Money manager Graham Slater, part of the Islington Debt Coalition, handing out information at Finsbury Park station on July 16 about the dangers of using payday lenders and advising them of better alternatives.

The latest unauthorised premises to close and move out was The Money Shop, operating at 63 Seven Sisters Road, N7.

Until recently, payday loan shops were able to operate from premises previously occupied by banks, building societies and other financial and professional institutions (class A2) without the need to apply for planning permission. However, following a recent change in the law, they have been removed from this use class and do now require planning permission.

Islington Debt Coalition includes  Islington Council, Islington Law Centre, Islington People’s Rights, London Capital Credit Union, the council’s Multiple Debt Team, the Fit Money project and the Citizens Advice Bureau.

Media contact Information

If you are a member of the media and would like more information please contact:

Islington Council media team – media@islington.gov.uk or 020 7527 2307.  Out of hours: 07769 163303

If you are a member of the public with a general question about the council please contact:

Contact Islington – www.islington.gov.uk/contactus or 020 7527 2000