Tighter controls are being demanded to control High Street money lenders.
Brighton and Hove City Councillor Bill Randall said new laws were needed to regulate shops which sell goods on long-term credit agreements with high interest rates and charges.
He said: "I am calling on the council to lobby the Government to change legislation to cap interest rates and control the activities of money-lending organisations which make enormous profits by milking the poorest and most vulnerable members of our community."
Coun Randall said the city badly needed a non-profit community bank which could loan money to people unable to access mainstream finances because they are on benefits or already in debt.
Research by the community finance department at Salford University and independent think-tank New Economics has found that people on low incomes form the majority of customers at stores charging high interest rates.
Coun Randall said: "According to a Government Treasury report, the doors of Britain's High Street banks and building societies are closed to about two million people, who pay crippling rates of interest to doorstep lenders and loan sharks and are denied access to financial services or advice.
"About a fifth are lone parents, 62 per cent rely on housing benefit to pay all or part of their income and about 60 per cent are housing association or council tenants.
"We should be working to provide an alternative for these people."
BrightHouse, which runs a chain of stores throughout the country, recently opened a shop in London Road, Brighton.
The firm offers unlimited credit at an interest rate of 29.9 per cent to people whose credit is not checked through the usual scoring system.
Customers are loaned money to buy goods which they pay back as a small amount each week for up to three years until they have finally paid the full amount. This can be up to four times the price other retailers pay for the same item.
A 28in digital television that costs £399 at Argos costs £1,246.44, including optional extras, from BrightHouse after three years of payment.
If a customer misses payments for two weeks, the product can be reclaimed by the store, no matter how much has already been paid for it.
A BrightHouse spokeswoman said: "BrightHouse is a responsible retailer with a very good reputation among the people who matter most, our customers.
"At BrightHouse those who choose to apply for credit are not put through electronic credit scoring methods.
"We use our own system which we know more accurately reflects a person's ability to stick to an agreement.
"We work closely with the relevant regulatory and consumer bodies."
Monday, August 15, 2005
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