Chancellor George Osborne has announced a proposal to introduce a new tax on payday loans companies, to help fund support for people who become victims to illegal loan sharks.
Mr Osborne was speaking in place of David Cameron at Prime Minister’s Questions, and was asked by Labour MP Richard Burden why the budget of the Illegal Money Lending Team had been reduced by one third.
Mr Osborne said: “We take very seriously illegal loan sharks and indeed excessive interest charges on payday lending, which is why it was Conservatives who introduced the first ever cap on payday lending.”
“[In regards to] the funding for illegal money laundering and loan shark teams we are looking now at a levy on the industry to meet the funding requirements [of the Team].”
The proposal is being inspected to try and find ways to fill funding gaps in the national authority which deals with cracking down on illegal loan sharks, Mr Osborne said.
However, Mr Burden responded afterwards: “[Mr Osborne] didn’t answer my question about why they are cutting the Team’s budget even though they have successfully helped more than 24,000 victims of loans sharking write off £63m of illegal debts.”
Illegal loan sharks are people who lend money without permission from the Financial Conduct Authority (FCA). All payday loans providers need to be approved by the regulator before they can start lending.
