The specific examples that I cited had been reported to me, but I understand that in many instances high charges are applied even if people slip into an unauthorised overdraft for a very short period.
Let me ask the Minister another question. In a letter to the Minister, Martin Wheatley said:
“In designing the cap we will, as far as possible, seek to minimise potential avoidance measures. It is possible for firms located in other EEA Member States to provide a payday lending service through the internet to UK consumers within the Electronic Commerce Directive. This is not something that the FCA can mitigate.”
What assessment has the Minister made of the extent of that problem, and what can be done to reduce that? As we take things forward, it will be important that we do not simply move people from one payday lending system on to something else that could be equally difficult.
I want to say a few words about the relationship between the banks and the payday lending sector, and to focus on the question of the banks lending to the payday lenders. During the consideration of the Bill in the other place, Lord Mitchell raised this issue, and his understanding was that Barclays lent Wonga over £250 million. When he investigated that further, he discovered that the sum was apparently much higher. He raised concerns about the mission and the guiding principles of the bank and asked whether lending money to the payday lenders so they can then lend it at higher rates to people who need loans is the right thing for the banks to be doing. That raises the question of what the banks’ responsibilities are to those on lower incomes, and also the issue of the banks’ relationships with the credit unions, for example.
I feel that we must press the amendments we have tabled to a Division. I hear what the Minister has said and I have heard the comments and concerns raised by
the FCA about the timetable, but I think it is reasonable to press for this to be done as quickly as possible. The Minister has said that January 2015 is the backstop date—the latest point when it could happen. I think it is reasonable for us to bring that forward and to press the amendments on data sharing to a Division.