A group of religious leaders and trade unionists calling for the return of usury laws have been invited to the Royal Bank of Scotland this week to speak about plans to cap lending rates to 10 per cent. The London Citizens alliance of church groups, mosques, unions and voluntary organisations is hoping to persuade RBS to launch a new low-interest credit card during Thursday’s meeting.
The reintroduction of usury laws is part of a transatlantic drive to curb the behaviour of loan sharks and credit card companies.
The issue is of particular concern to the UK as there are currently no limits on the amount a company can charge on offering credit.
According to the Guardian newspaper, Neil Jameson, the group's lead organiser, said: “Italy has limits, France has limits, Germany too. The UK is quite unusual if not unique in having no limit at all.”
Usury laws have not been in place in the UK since the 19th century when they were scrapped. In the US they were in place until relatively recently, and the laws were only relaxed by Jimmy Carter when rules were changed to allow banks and companies to charge unlimited interest rates.
London Citizens is concerned that banks are taking advantage of hundreds of thousands of people, pushing them into unsustainable debt by charging excessive interest rates.
RBS has been specifically targeted by the group as the bank is part-owned by the taxpayer. According to the Guardian, Jameson said: “RBS has a card called Black Card and charges as much as 50 per cent interest if you default. Lots of banks do this and we want to restrain them all, but the difference with RBS is that we own it.”
Industry experts, and even Prime Minister Gordon Brown, have suggested in the past that the lending behaviour of the credit card industry required restructuring, and that “clear principles” had to be established on what costs people could face on debts.
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