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That figure is already out of date.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.

MoneySupermarket.com 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 ww.minicredit.co.uk and www.paydayuk.co.uk.

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 www.wonga.com

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

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Labour's establishment suspects a Momentum conspiracy - they're right

Bernie Sanders-style organisers are determined to rewire the party's machine.  

If you wanted to understand the basic dynamics of this year’s Labour leadership contest, Brighton and Hove District Labour Party is a good microcosm. On Saturday 9 July, a day before Angela Eagle was to announce her leadership bid, hundreds of members flooded into its AGM. Despite the room having a capacity of over 250, the meeting had to be held in three batches, with members forming an orderly queue. The result of the massive turnout was clear in political terms – pro-Corbyn candidates won every position on the local executive committee. 

Many in the room hailed the turnout and the result. But others claimed that some in the crowd had engaged in abuse and harassment.The national party decided that, rather than first investigate individuals, it would suspend Brighton and Hove. Add this to the national ban on local meetings and events during the leadership election, and it is easy to see why Labour seems to have an uneasy relationship with mass politics. To put it a less neutral way, the party machine is in a state of open warfare against Corbyn and his supporters.

Brighton and Hove illustrates how local activists have continued to organise – in an even more innovative and effective way than before. On Thursday 21 July, the week following the CLP’s suspension, the local Momentum group organised a mass meeting. More than 200 people showed up, with the mood defiant and pumped up.  Rather than listen to speeches, the room then became a road test for a new "campaign meetup", a more modestly titled version of the "barnstorms" used by the Bernie Sanders campaign. Activists broke up into small groups to discuss the strategy of the campaign and then even smaller groups to organise action on a very local level. By the end of the night, 20 phonebanking sessions had been planned at a branch level over the following week. 

In the past, organising inside the Labour Party was seen as a slightly cloak and dagger affair. When the Labour Party bureaucracy expelled leftwing activists in past decades, many on went further underground, organising in semi-secrecy. Now, Momentum is doing the exact opposite. 

The emphasis of the Corbyn campaign is on making its strategy, volunteer hubs and events listings as open and accessible as possible. Interactive maps will allow local activists to advertise hundreds of events, and then contact people in their area. When they gather to phonebank in they will be using a custom-built web app which will enable tens of thousands of callers to ring hundreds of thousands of numbers, from wherever they are.

As Momentum has learned to its cost, there is a trade-off between a campaign’s openness and its ability to stage manage events. But in the new politics of the Labour party, in which both the numbers of interested people and the capacity to connect with them directly are increasing exponentially, there is simply no contest. In order to win the next general election, Labour will have to master these tactics on a much bigger scale. The leadership election is the road test. 

Even many moderates seem to accept that the days of simply triangulating towards the centre and getting cozy with the Murdoch press are over. Labour needs to reach people and communities directly with an ambitious digital strategy and an army of self-organising activists. It is this kind of mass politics that delivered a "no" vote in Greece’s referendum on the terms of the Eurozone bailout last summer – defying pretty much the whole of the media, business and political establishment. 

The problem for Corbyn's challenger, Owen Smith, is that many of his backers have an open problem with this type of mass politics. Rather than investigate allegations of abuse, they have supported the suspension of CLPs. Rather than seeing the heightened emotions that come with mass mobilisations as side-effects which needs to be controlled, they have sought to joins unconnected acts of harassment, in order to smear Jeremy Corbyn. The MP Ben Bradshaw has even seemed to accuse Momentum of organising a conspiracy to physically attack Labour MPs.

The real conspiracy is much bigger than that. Hundreds of thousands of people are arriving, enthusiastic and determined, into the Labour party. These people, and their ability to convince the communities of which they are a part, threaten Britain’s political equilibrium, both the Conservatives and the Labour establishment. When the greatest hope for Labour becomes your greatest nightmare, you have good call to feel alarmed.