CROSS-PARTY support is being urged at Holyrood to pressure the UK Government into introducing tougher regulation of payday loan companies.
SNP MSP Margaret Burgess said the Scottish Parliament had to speak up "for those who find themselves stuck in the debt trap".
Her comments follow a survey for Shelter, reported in The Herald yesterday, which showed hundreds of thousands of Scots are spiralling into debt by turning to payday loan companies, which charge up to 4000% annual interest, to pay their bills.
Ms Burgess, who was previously a director of Citizens Advice Scotland, said: "At Citizens Advice, all too often we'd hear from people who had turned to these companies and had trouble dealing with the repayments. That leaves people struggling financially and emotionally.
"I can understand why many people turn to these companies to meet unexpected bills or to make the money stretch a little bit further but the lack of regulation is a real problem.
"Getting involved with these companies often just traps people in a downward financial spiral which is hard to escape from."
She added: "It is high time the UK Government got their act together and properly protected the most vulnerable in our society."
Shelter Scotland spokesman Gordon MacRae said that with interest rates of up to 4000% annually, payday loans were unsustainable and could "quickly lead to snowballing debt, eviction, repossession and ultimately homelessness".
Ms Burgess's colleague in the European Parliament, Alyn Smith, has raised the issue with the European Commission, which confirmed regulation of the companies was the responsibility of member states.
He said: "It is clear that some legal restrictions must be put in place in order to curb the ludicrous rates of interest. This has already happened in many other European nations as well as 35 US states, where there is a limit on the maximum interest these companies can charge, so it is possible."
He said the UK Government had consistently failed in regulating the financial markets and had done "absolutely nothing" to reform the system despite an almost global agreement that change must happen.
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