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StepChange Debt Charity response to the Law Commission’s recommendations on logbook loans

12 September 2016

In response to the Law Commission’s recommendations on protecting consumers from unfair logbook loans, Peter Tutton, Head of Policy at StepChange Debt Charity, said:

“Legislation on logbook loans is over a century old and not fit for purpose, so it is good to see action being taken. Logbook loans can cause significant harm and the current protections are wholly inadequate.

“We need effective, modern consumer protection and these recommendations are a positive step forward. However, in their current form, they will not provide adequate protection and the people who will suffer are the ones that need it the most.

“If people have to actively opt-in to receive protection from the courts against lenders repossessing their car, our evidence suggests it will not work. It requires too much proactivity and understanding from financially vulnerable people who may not even feel able to open their mail. It also requires too little from sub-prime lenders seeking to take away a car that could be essential for work or family life.”

Notes to editors

1. StepChange Debt Charity believes that logbook loans cause harm due to:

  • Poor affordability checks – lending to people who then struggle to repay them
  • Complicated loan agreements – people do not understand how much they have to repay and are unaware they can lose their car
  • Being a form of high cost credit – people can end up repaying significantly more than the loan they took out
  • Aggressive debt collection practices – refusing to consider affordable repayments and threatening to or actually repossessing the car

2. StepChange Debt Charity does welcome the recommendations of simplifying of loan documents and borrowers’ right to voluntary termination by returning the car.

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Email: press@stepchange.org

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