High-interest lenders move on from paydays

"Payday loan" companies are starting to branch out to much longer terms

Turn on the telly during the daytime and you are very likely to see adverts informing you about PPI claims or payday loans. Now there are a new bunch to be aware of: 12-month, high-cost, unsecured loans at rates of interest of up to 278 per cent – meaning that repayments will already be over twice the amount you have borrowed, and that excludes fees and penalties that might be incurred (Pounds to Pocket, for example, charge £12 for their penalty fees).

That these companies are advertising expensive loans over a year, with no credit checks, and where the money can be in your account in ten minutes, shows another failure in the mainstream banking sector to offer sensible loans to consumers.

Figures show that even after UK banks were in receipt of bailout funds, 1.75 million people go without a transitional bank account, and 9 million lack access to affordable credit. To bolster this credit cards have dropped in circulation by 1 million since 2011 and membership to credit unions have not risen from 2 per cent of the population, despite funding and modernisation attempts.

The cost of living, including how much we spend on food and bills, continues to go up, and real incomes are no higher than they were in 2005 for many of us.

As payday lenders are set to be the beneficiaries of this mess in personal finance, it's hardly a surprise to see them venturing out with other products. One broker, 1 Year Loan, has on its website:

If you too [sic] facing inadequacy of funds and want a [sic] financial help, then 1 year payday loans can be the loan service that you can rely upon […] Apply with 1 Year Loan No Credit Check right away!

With the 12-month loan, lenders offer larger sums that they claim are competitive when compared with other payday lenders.

Mentioned in a report on these new loans in the Independent, the company Lending Stream boast that their 3,378.1 per cent APR beats Wonga's 4,214 per cent equivalent – though of course Wonga do not encourage taking out loans over 6-12 months.

Pounds to Pocket, another company, on their website point out that if you borrow £500 for a year you would pay back £79.09 a month, a total of £949.01 including interest of £449.01.

It is to the shame of mainstream lenders that expensive alternatives are seeing a growth in their product. In France and Germany mainstream credit facilities are part of most basic bank account packages – something not extended to everyone in the UK.

In the Independent's report, the journalists mistakenly say that payday loans could become small fry compared to the 12-month loans, while the headline notes: "Forget payday loans, the one-year debts are the ones to fear".

This is not the right way to look at the situation. What this represents is payday loan companies finding a gap in the market and swooping in where mainstream services are being risk averse. This should not put us at ease with payday lenders at all.

Minister Norman Lamb recently welcomed the revised codes of conduct from the four trade bodies that represent payday lenders (Consumer Finance Association (CFA), Finance and Leasing Association (FLA), British Cheque and Credit Association (BCCA) and Consumer Credit Trade Association (CCTA)).

But payday lenders are obliged to show how much their product costs anyway, set out in the Office for Fair Trading (OFT) lending code. In their guide on irresponsible lending, the OFT note that lenders should carry out proper credit checks and disincentivise rollovers. The revised codes are the very least we can expect.

Yet the industry is currently under investigation by the OFT after concerns lenders are taking advantage of people in financial difficulty – which is contrary to their codes.

We should not become complacent about the payday lenders even when other products arrive on the market that do not sit well with us. The government and Norman Lamb should be spending all the time they can spare to finding out why people end up taking out these loans and making sure they can seek mainstream services where it benefits them.

A payday loan company in Birkenhead. Photograph: Getty Images

Carl Packman is a writer, researcher and blogger. He is the author of the forthcoming book Loan Sharks to be released by Searching Finance. He has previously published in the Guardian, Tribune Magazine, The Philosopher's Magazine and the International Journal for Žižek Studies.
 

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All the Premiership teams are competing to see who’s got the biggest stadium

It’s not just a financial, but a macho thing – the big clubs want to show off that they have a whopper.

Here in NW5, where we live noisily and fashionably, we are roughly equidistant from Arsenal and Spurs. We bought the house in 1963 for £5,000, which I mention constantly, to make everyone in the street pig sick. Back in 1963, we lived quietly and unfashionably; in fact, we could easily have been living in Loughton, Essex. Now it’s all changed. As have White Hart Lane and Highbury.

Both grounds are a few metres further away from us than they once were, or they will be when White Hart Lane is finished. The new stadium is a few metres to the north, while the Emirates is a few metres to the east.

Why am I saying metres? Like all football fans, I say a near-miss on goal was inches wide, a slow striker is a yard off his pace, and a ball player can turn on a sixpence. That’s more like it.

White Hart Lane, when finished, will hold 61,000 – a thousand more than the Emirates, har har. Meanwhile, Man City is still expanding, and will also hold about 60,000 by the time Pep Guardiola is into his stride. Chelsea will be next, when they get themselves sorted. So will Liverpool.

Man United’s Old Trafford can now hold over 75,000. Fair makes you proud to be alive at this time and enjoying the wonders of the Prem.

Then, of course, we have the New Wembley, architecturally wonderful, striking and stunning, a beacon of beauty for miles around. As they all are, these brave new stadiums. (No one says “stadia” in real life.)

The old stadiums, built between the wars, many of them by the Scottish architect Archibald Leitch (1865-1939), were also seen as wonders of the time, and all of them held far more than their modern counterparts. The record crowd at White Hart Lane was in 1938, when 75,038 came to see Spurs play Sunderland. Arsenal’s record at Highbury was also against Sunderland – in 1935, with 73,295. Wembley, which today can hold 90,000, had an official figure of 126,000 for the first Cup Final in 1923, but the true figure was at least 150,000, because so many broke in.

Back in 1901, when the Cup Final was held at Crystal Palace between Spurs and Sheffield United, there was a crowd of 110,820. Looking at old photos of the Crystal Palace finals, a lot of the ground seems to have been a grassy mound. Hard to believe fans could see.

Between the wars, thanks to Leitch, big clubs did have proper covered stands. Most fans stood on huge open concrete terraces, which remained till the 1990s. There were metal barriers, which were supposed to hold back sudden surges, but rarely did, so if you were caught in a surge, you were swept away or you fell over. Kids were hoisted over the adults’ heads and plonked at the front.

Getting refreshments was almost impossible, unless you caught the eye of a peanut seller who’d lob you a paper bag of Percy Dalton’s. Getting out for a pee was just as hard. You often came home with the back of your trousers soaked.

I used to be an expert on crowds as a lad. Rubbish on identifying a Spitfire from a Hurricane, but shit hot on match gates at Hampden Park and Ibrox. Answer: well over 100,000. Today’s new stadiums will never hold as many, but will cost trillions more. The money is coming from the £8bn that the Prem is getting from TV for three years.

You’d imagine that, with all this money flooding in, the clubs would be kinder to their fans, but no, they’re lashing out, and not just on new stadiums, but players and wages, directors and agents. Hence, so they say, they are having to put up ticket prices, causing protest campaigns at Arsenal and Liverpool. Arsène at Arsenal has admitted that he couldn’t afford to buy while the Emirates was being built. Pochettino is saying much the same at Spurs.

It’s not just a financial, but a macho thing – the big clubs want to show off that they have a whopper. In the end, only rich fans will be able to attend these supergrounds. Chelsea plans to have a private swimming pool under each new box, plus a wine cellar. Just like our street, really . . . 

Hunter Davies is a journalist, broadcaster and profilic author perhaps best known for writing about the Beatles. He is an ardent Tottenham fan and writes a regular column on football for the New Statesman.

This article first appeared in the 11 February 2016 issue of the New Statesman, The legacy of Europe's worst battle