Guardian Unlimited Money | Credit and debt |
In my time I've had a bit to do with helping people where debt has spiralled out of control and I must say that it seems to me that this kind of thing is usurious; I do hope that the fall out from this ruling provokes some changes to the rules. I don't in principle think that charging fees for loans is a bad thing [even if they are based on percentages over time -ie interest -because at low rates interest seems like quite a good way to charge a fee]. What does need looking at is charging interest on arrears and penalty fees which is the big factor that leads to debts spiralling uncontrollably. Perhaps there should be a ceiling so that the total paid pbakc cannot be over a certain amount ... it's tough but what happened to this couple is clearly iniquitous and there should be a grown-up way to address the iniquity.
From the judge:
"'Where the rate concerned is as high as 34.9% it seems to me that the combination of factors is so potentially exorbitant that it is grossly so and does grossly contravene the ordinary principles of fair dealing.' He added: 'This is one of the few credit bargains which is extortionate.'"
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