Time to get out of the water

Web stats highlight growing demand for payday loans

For a newly elected MP, Walthamstow MP Stella Creasy can take a bow. The campaign she has led against payday loans has been pretty effective.

The latest, in case you missed it, is that the Office of Fair Trading (OFT) is to investigate 50 UK payday lenders amid concerns that some firms are taking advantage of vulnerable consumers.

The scale and continuing growth of the payday loans sector – or as Creasy would call it, the legal loan shark industry – is a worrying sign of the times.

In February, the Coop Bank found that 5 per cent of the British population accumulated debt in 2011 due to payday loans.

That figure is already out of date.

A report recently released by Greenlight, the leading independent digital marketing agency, provides further evidence of the growing size of the payday loan industry.

In January, UK consumers made a total of 2.5m online searches for retail banking-related products.

Loans accounted for the majority (37 per cent) of searches (934,234) with the keywords ‘Loans’, ‘Payday loans’ and ‘Student loans’ being the top three terms consumers used to conduct their searches.

Specfically, the search term ‘payday loans’ accounted for 165,000 or 7 per cent of all retail banking searches in January.

By contrast, searches for the terms ‘credit cards’ and ‘mortgages’ each scored a mere 4 per cent of all searches.

So, just to labour the point, almost as many searches were conducted for payday loans as for searches for credit cards and mortgages, combined.

The Greenlight research also flags up conclusively just how aggressive and digital-savvy the payday loans sector has become. is the most visible online retail banking-related online advertiser, achieving a 71 per cent share of voice through bidding on 25 keywords, at an average ad position of four. That finding comes as no surprise and is not exactly a cause for concern.

And the second most visible online banking advertiser? Step forward Wonga, with a 33 per cent share of visibility through bidding on four keywords.

Its payday rival QuickQuid displayed the most visible ad creatives of any advertiser (equal with Tesco Bank) while the top 10 also featured and

If you think that it is bad in the UK, it is arguably worse in the US.

In the US, the numbers are staggering with an estimated 12m Americans annually caught in long-term debt from payday loans, according to non-profit research and policy organisation, the Centre for Responsible Lending. In contrast to the position in the UK, a number of leading US retail banks have jumped onto the bandwagon and are offering a range of payday loan products.

Wells Fargo, Regions Financial, US Bank and Fifth Third are just some of the largest US retail banks to offer payday loans.

It will be a brave –or rather foolish - UK retail bank which looks to follow their lead with such a product launch.

Meantime, pending the OFT investigation being concluded, one would hope that the payday loans sector might have the commercial and political savvy to clean up their act.

They could, for example, take steps to ensure that customers are not trapped into a cycle of debt by ending the rolling over of payday loans; they could consider the radical step of self-regulation by getting by on less than the APRs of, say the 4,214 per cent charged by

Then again, pigs might fly.

The chances are that this is one area of retail banking where we might witness something approaching a consensus: that it is an area overdue for regulation.

That would be a right result for the new girl in the House from Walthamstow.

Douglas Blakey is the editor of Retail Banker International

Photograph: Getty Images

Douglas Blakey is the editor of Retail Banker International

Photo: Getty Images
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What's to be done about racial inequality?

David Cameron's words on equal opportunities are to be welcomed - now for some action, says Sunder Katwala.

David Cameron made the strongest, clearest and most high profile statement about ethnic inequalities and the need to tackle discrimination ever yet offered by a British Prime Minister in his leader’s speech to the Conservative Party conference in Manchester.
“Picture this. You’ve graduated with a good degree. You send out your CV far and wide. But you get rejection after rejection. What’s wrong? It’s not the qualifications or the previous experience. It’s just two words at the top: first name, surname. Do you know that in our country today: even if they have exactly the same qualifications, people with white-sounding names are nearly twice as likely to get call backs for jobs than people with ethnic-sounding names? … That, in 21st century Britain, is disgraceful. We can talk all we want about opportunity, but it’s meaningless unless people are really judged equally”, said Cameron.
While the proof of the pudding will be in the eating, this was a powerfully argued Prime Ministerial intervention – and a particularly well-timed one, for three reasons.

Firstly, the Prime Minister was able to root his case in an all-but-universally accepted appeal for equal opportunities. It will always prove more difficult in practice to put political energy and resources behind efforts to remedy discrimination against a minority of the population unless a convincing fairness case is made that values cherished across our whole society are at stake. Cameron’s argument, that any party which tells itself that it is the party of the ‘fair chance’ and ‘the equal shot’ must have a response when there is such clear evidence of discrimination, should prove persuasive to a Conservative Party that has not seen race inequalities as its natural territory. Cameron argued that the same principles should animate responses to discrimination when it comes to race, gender and social class. Put like that, wanting job interviews to be fair – by eradicating conscious and unconscious patterns of bias wherever possible – would strike most Britons as offering as clear a case of the values of fair play as wanting the best baker to win the Great British Bake-Off on television.
Secondly, Cameron’s intervention comes at a potential "tipping point" moment for fair opportunities across ethnic groups. Traditionally, ethnic discrimination has been discussed primarily through the lens of its impact on the most marginalised. Certainly, persistent gaps in the criminal justice system, mental health provision and unemployment rates remain stark for some minority groups. What has been less noticed is the emergence of a much more complex pattern of opportunity and disadvantage – not least as a consequence of significant ethnic minority progress.

Most strikingly of all, in educational outcomes, historic attainment gaps between ethnic minorities and their white British peers have disappeared over the last decade. In the aggregate, ethnic minorities get better GCSE results on average. Ethnic minority Britons are more likely, not less likely, to be university graduates than their fellow citizens. 

As a result of that progress, Cameron’s intervention comes at a moment of significant potential – but significant risk too. Britain’s ethnic minorities are the youngest and fastest-growing sections of British society. If that educational progress translates into economic success, it will make a significant contribution to the "Great British Take-Off" that the Prime Minister envisions. But if that does not happen, with educational convergence combined with current ‘ethnic penalties’ in employment and income persisting, then that potential could well curdle into frustration that the British promise of equal opportunities is not being kept.  Cameron also mirrored his own language in committing himself to both a ‘fight against extremism’ and a ‘fight against discrimination’: while those are distinct challenges and causes, actively pursuing both tracks simultaneously has the potential, at least, depolarise some debates about responses to extremism  - and so to help deepen the broad social coalitions we need for a more cohesive society too.

Thirdly, Cameron’s challenge could mark an important deepening in the political competition between the major parties on race issues. Many have been struck by the increase in political attention on the centre-right to race issues over the last five to ten years. The focus has been on the politics of representation. By increasing the number of non-white Conservative MPs from two to seventeen since 2005, Cameron has sent a powerful signal that Labour’s traditional claim to be ‘the party of ethnic minorities’ would now be contested. Cameron was again able to celebrate in Manchester several ways in which his Cabinet and Parliamentary benches demonstrate many successful journeys of migrant and minority integration in British society. That might perhaps help to ease the fears, about integration being impossible in an era of higher immigration, which the Home Secretary had articulated the previous day.

So symbolism can matter. But facial diversity is not enough. The politics of ethnic minority opportunity needs to be about more than visits to gurdwaras, diversity nights at the party conference fringes and unveiling statues of Mahatma Gandhi in Parliament Square. Jeremy Corbyn’s first speech as Labour leader did include one brief celebratory reference to Britain’s ethnic diversity – “as I travelled the country during the leadership campaign it was wonderful to see the diversity of all the people in our country” – and to Labour bringing in more black, Asian and ethnic minority members - but it did not include any substantial content on discrimination. Tim Farron acknowledged during his leadership campaign that the Liberal Democrats have struggled to get to the starting-line on race and diversity at all. The opposition parties too will no doubt now be challenged to match not just the Prime Minister’s rhetorical commitment to challenging inequalities but also to propose how it could be done in practice.

Non-white Britons expect substance, not just symbolism from all of the parties on race inequalites.  Survation’s large survey of ethnic minority voters for British Future showed the Conservatives winning more ethnic minority support than ever before – but just 29 per cent of non-white respondents were confident that the Conservatives are committed to treating people of every ethnic background equally, while 54 per cent said this of Labour. Respondents were twice as likely to say that the Conservatives needto do more to reach out – and the Prime Minister would seem to be committed to showing that he has got that message.  Moreover, there is evidence that ethnic inclusion could be important in broadening a party’s appeal to other younger, urban and more liberal white voters too – which is why it made sense for this issue to form part of a broader attempt by David Cameron to colonise the broad centre of British politics in his Manchester speech.

But the case for caution is that there has been limited policy attention to ethnic inequalities under the last two governments. Restaurateur Iqbal Wahhab decided to give up his role chairing an ethnic minority taskforce for successive governments, unconvinced there was a political commitment to do much more than convene a talking shop. Lib Dem equalities minister Lynne Featherstone did push the CV discrimination issue – but many Conservatives were sceptical. Cameron’s new commitment may face similar challenges from those whose instinct is to worry that more attention to discrimination or bias in the jobs market will mean more red tape for business.

Labour had a separate race inequalities manifesto in 2015, outside of its main election manifesto, while the Conservative manifesto did not contain significant commitments to racial inequality. The mid-campaign launch in Croydon of a series of race equality pledges showed an increasing awareness of the growing importance of ethnic minority votes - though the fact that they all involved aiming for increases of 20 per cent by 2020 gave them a slightly back-of-the-envelope feel. 

Prime Ministerial commitments have an important agenda-setting function. A generation ago the Stephen Lawrence case opened the eyes of middle England to racist violence and police failures, particularly through the Daily Mail’s persistent challenging of those injustices. A Conservative Prime Minister’s words could similarly make a big difference in the mainstreaming of the issue of inequalities of opportunity. What action should follow words? Between now and next year’s party conference season, that must will now be the test for this Conservative government – and for their political opponents too. 

Sunder Katwala is director of British Future and former general secretary of the Fabian Society.