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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Why Nigel Farage is hoovering up all the women I know

Beware young fogeys.

I can’t remember where I was when I first worked out that I was older than Nigel Farage. You’d think after that bombshell went off, you’d still be able to locate the crater. Anyway, there it is: the cut-price little Oswald Mosley is about a year younger than me.

I mention this not because I want to dwell on the nasty piece of shit, but because I’ve been having to face, at one remove, so to speak, the problem of young fogeyism. It seems to be all around. And not only that, it’s hoovering up women I know.

The first time it happened was with B——. She was going to come round last weekend, but then emailed to cancel the day before, because she was going to watch rugby – apparently there’s some kind of tournament on, but it never seems to end – with her boyfriend. How ghastly, I said, or words to that effect; I’d rather die.

She then made the Category One mistake of saying, “Rugby, cricket, all the same to me,” with a cheeky little “x” at the end of it.

I replied thus: Rugby is a violent and brutal game (the coy term is “contact sport”, which means you get to – indeed, are encouraged to – injure the opposing team as often as you can, in the absence of any other tactic) loved by fascists, or, at best, those with suspicious ideas about the order of society with which I doubt you, B——, would wish to be aligned. Also, only people of immense bulk and limited intelligence can play it. Cricket is a game of deep and subtle strategy, capable of extraordinary variation, which is appreciated across the class spectrum, and is also so democratically designed that even the less athletic – such as I – can play it. [I delete here, for your comfort, a rant of 800 or so words in which I develop my theory that cricket is a bulwark against racism, and rugby, er, isn’t.] Both are dismayingly over-represented at the national level by ex-public-school boys; cricket as a matter of historical accident (the selling-off of school playing fields under Thatcher and Major), rugby as a matter of policy. Have a lovely day watching it.

Two things to note. 1) This woman is not, by either birth or ancestry, from a part of the world where rugby is played. 2) You wouldn’t have thought she was one of nature’s rugby fans, as she considers that Jeremy Corbyn is a good person to be leading the Labour Party. (True, thousands of Tories think the same thing, but for completely different reasons.)

That’s Exhibit A. Exhibit B is my old friend C——, whom I haven’t seen for about five years or so but suddenly pops up from the past to say hello, how about a drink? I always liked C—— very much, largely because she’s very funny and, let’s be frank about this, something of a sexpot. She seems keen to bring someone over with her who, reading between the lines like a modern-day Sherlock Holmes, I deduce to be her latest partner. The thing is, she says, she’s not sure he can come, because he might be going beagling.

Beagling?

Well, she does come round (alone, thank goodness) and she’s looking even better than I remember, and is even funnier, too, and she shows me some of the pictures she has put up on her profile page on some dating site, and they’re not the kind of photographs this magazine will ever publish, let’s leave it at that. (One of them even moves.) And, as it turns out – and it doesn’t really surprise me that much – the young beagler she is seeing is a good thirty years-plus younger than she, and his photograph shows him to be all ears and curls, like a transporter mix-up between Prince Charles and the young David Gower. Like B——’s young man, he is not called Gervaise or Peregrine but may as well be.

What on Earth is going on here? Can we blame Farage? I can understand the pull of the void, but this is getting ridiculous. Do they not quite understand what they’re doing? Actually, C—— does, because she’s had her eyes open all her life, and B——, her youth and political idealism notwithstanding, didn’t exactly come down in the last shower, either.

So what is it with these young wannabe toffs – one of whom isn’t even rich? “You’d like him,” C—— says, but I’m not so sure. People who go beagling sure as hell don’t like me, and I see no reason not to return the favour.

Well, I can’t thrash this out here. C—— leaves, but not before giving me the kind of kiss that makes me wish Binkie Beagley, or whatever his name is, would just wink out of existence.

Nicholas Lezard is a literary critic for the Guardian and also writes for the Independent. He writes the Down and Out in London column for the New Statesman.

This article first appeared in the 16 February 2017 issue of the New Statesman, The New Times