Scottish independence: Payday loan interest rates 'to be capped' post-Yes

money and a purse John Swinney has pledged to protect consumers post-independence

Interest rates on payday loans would be capped in an independent Scotland, according to Finance Secretary John Swinney.

He made the pledge as he outlined plans for a reformed system of consumer protection after a Yes vote.

It would focus on tackling issues like payday loans, nuisance phone calls and postal delivery charges.

The UK government argues that the current system offers a consistent approach across all the nations.

Mr Swinney told a gathering of business leaders in Edinburgh that consumers and companies needed a system "they can trust and that works in their best interests".

He added: "The Scottish government currently does not have responsibility for arrangements to empower and protect consumers.

"With independence, we would be able to build a simpler system which meets the needs of our people, and puts families and households, small businesses and local communities at the heart of everything that it does."

The SNP minister said an independent Scotland could have a consumer ombudsman to deal with complaints quickly. He pointed out that there were currently more than 95 ombudsmen schemes, operating across 35 sectors.

Other plans, which appeared in a discussion paper, include;

  • Pay day loans - the aim is to cap interest rates, minimise loans continually rolling over, and improve market regulation to "stop people getting trapped in a cycle of debt"
  • Delivery charges - an independent Scotland would match the current postal service and allow greater choice and fairer prices to combat rural areas being disproportionately affected by excessive charges
  • Nuisance calling - regulators would be given more "effective enforcement tools" and sufficient penalties to deter rogue traders, while working with "responsible companies" to introduce codes of practice to protect customer data.

The people of Scotland vote on their country's future in a referendum on 18 September next year.

Scottish government pledges

  • Streamlining "the confusing range" of organisations who provide advice by setting up a recognisable brand to provide support
  • Introducing a unified consumer body to integrate consumer protection, advocacy, education, advice and enforcement for all sectors, similar to the work of the Northern Ireland Consumer Council
  • Creating community hubs to provide education and advice and bringing together the services of the Citizens Advice Bureaux, local authority advice and financial advice
  • Creating a Consumer Ombudsman to deal with complaints quickly. One possible option would see the creation of three agencies, covering economic regulation, competition regulation and consumer advocacy, advice, education and enforcement. A second possible option would consist of two agencies - a combined consumer and competition authority, and a combined economic regulator.

They will be asked the yes/no question: "Should Scotland be an independent country?"

In a paper focusing on the financial sector and the question of independence, the UK government touched on the issue of consumer protection.

It said the current set up meant that "no matter" where an individual lived in the UK, they could "expect the same standard of consumer protection".

The paper then listed the various organisations tasked with protecting consumers. They include the Financial Services Compensation Scheme (FSCS); the Pension Protection Fund (PPF); the Financial Conduct Authority (FCA); the Financial Ombudsman Services (FOS) and the Money Advice Service (MAS).

Responding to the Scottish government's plan, a UK government spokesman said: "Everyone wants to see consumers in Scotland protected and the UK system currently provides unified, yet country- specific protection where people in Weymouth have the same access to help as those in Wick.

"We are not convinced the Scottish government's plans are practical or a solution to the many complexities of cross-border enforcement.

"Rogue traders do not respect national borders and it is far more effective to take a UK-wide approach to gathering intelligence, threat assessment and enforcement."

The spokesman said the Scottish government had been fully involved in the development of Trading Standards Scotland, which aims to bring together the enforcement capacity across Scotland, complementing the arrangements in England and Wales.

"Another example is that we are already providing a universal postal service that is affordable as we spread the cost across a UK consumer base," he said.

"The Scottish government have still not explained how they will meet the UK commitment under independence with a much smaller consumer base."

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