The Government faces further calls to cap the cost of payday loans and other high costs credit firms, after an e-petition urging action was launched this week in support of proposals by Labour MP Stella Creasy.

The petition by the Daily Mirror newspaper's Nick Sommerlad, asks the Government to act before Christmas to cap costs, so consumers are better protected from payday, home credit and hire purchase lenders (you can sign the e-petition here).

Key Points

  • Petition calls for cap on cost of payday loans
  • Urges government for response by Christmas
  • Growing numbers in debt after taking out payday loans

Some levy huge figures on these types of loans.

With a payday loan, if you borrow £100 over 8 days, you could expect to pay around £14 in interest and fees, and this is from some of the cheaper firms.

In addition, there are hefty fees for late repayments which can result in charges that can add up to a large proportion, or even exceed, the amount borrowed.

The Government announced in July it would conduct further investigations into the market before deciding whether or not to cap the cost of these loans, but Sommerlad calls for swifter action.

The e-petition "condemns the Government for continuing to delay action on regulating the high-cost credit market".

Creasy, a vocal opponent of sky-high charges, previously proposed a limit on the amount payday, doorstep and hire purchase lenders can charge in parliament in February, to take immediate effect.

This was partially defeated in a vote, though the amendment instead called for ministers to be given more time to consider new measures.

Charity Citizens Advice says the number of people running into debt after taking out a payday loan quadrupled in May to July this year, compared to the same period in 2009.

Earlier this month, its social policy officer, Peter Tutton, called for tighter regulation from the Government on the industry (see the Tighter payday loan regulation news story).

An e-petition needs at least 100,000 signatures to be eligible for debate in the House of Commons.