A so-called “crackdown” on payday loan vultures was dismissed yesterday by general union Unite as “tinkering at the margins.”
Short-term loans from national companies can charge interest which over a year reaches 2,000 per cent or more.
In Canada and many US states laws exist to cap interest rates, but Britain continues to allow rates which are pushing the country’s poorest people into a spiral of debt.
The government-backed Financial Conduct Authority is planning new regulations but they will not take effect until next summer.
New rules include making lenders carry out affordability checks and control repeated loans - taking out loans to pay off loans.
But Unite said the proposals are “too weak and will take too long to implement,” leaving lenders with months to enjoy a multimillion-pound bonanza exploiting those in greatest need.
Unite general secretary Len McCluskey said: “The loan sharks will have a smile on their face today because these measures are too little, too late.
“They fail to deal with the real reason people who borrow from a payday lender end up in deep financial trouble, which is the criminally high interest rates these lenders can get away with.
“The proposals, while welcome, just tinker at the margins. They also fail to address the reasons people fall into hardship and the clutches of payday lenders.”
People are borrowing an average of £660 a month to get by and are “sucked down into a spiral of debt” by the painfully high interest rates charged by the payday vultures, the union’s own research shows.
“The government’s failure to act swiftly on payday lenders who have racked up enormous profits on the back of human misery and stress is shameful,” added Mr McCluskey.
“We are forced to conclude that their lightness of touch comes about because of their close relationship with the lenders and Wonga in particular.
“Indeed a payday lender advises the Prime Minister, a massive conflict of interest if ever there was one.”
A survey of 4,087 Unite members in August showed people were borrowing three times as much as they were in March 2012.
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