A victory against usury

The government agrees to act on payday lending.

It gives me great pleasure to say that those of us who campaign to reduce the grip that payday lenders have on the most vulnerable individuals and families in Britain have won a very important victory. The Government has agreed to provisions within the Financial Services Bill providing the newly created Financial Conduct Authority (which will come into existence 1 April 2013) with the power to cap the cost of credit agreements.

While many were understandably focusing on the Autumn Statement, it was finally agreed by the government on Wednesday that the FCA will be able to create rules that:

  • Prohibit the charging of certain types of fees which it considers to be unacceptable;
  • Prohibit the charging of costs above an amount which it specifies as unacceptable; and
  • Prohibit rollover lending, where a debtor arranges separate credit arrangements in order to settle existing ones.

One signatory to the successful amendment of the Financial Services Bill, Baroness Grey-Thompson, told me:

There are too many tragic stories of people who have got themselves in to a massive financial mess, which seems impossible to get out of. I hope that these proposals will crack down on the worst excesses of these loans. 

She continued:

Something that came up in the debate is that we need better access to loans for people, and that we should consider more credit unions. I am by no means an expert on financial matters, but it worries me that people can easily get themselves in to great financial difficulty.

Conservative MP for East Hampshire, Damian Hinds, while welcoming of the move forward by the government, has said that providing a cap on credit is only one part of the overall battle. A shift in direction needs to take place for credit unions too.

Commenting at Conservative Home, Hinds says:

The sector needs a sensible degree of change which maintains safeguards and comfort for customers, but allows them to get onto competition terms with payday and home credit lenders and rent-to-buy stores.

Both Baroness Grey-Thompson and Damian Hinds MP are correct – this is fantastic news. Damon Gibbons of the Centre for Responsible Credit has even called it a “historic moment”. But the fight doesn't end here. 

We must go further. We need:

  • The creation of a Community Reinvestment Act, which would oblige banks not lending sufficiently in local communities to sponsor local affordable lenders such as credit unions;
  • The reinstatement and centralisation of the social fund – something that could be operated through a credit union; and
  • Banks offering emergency overdrafts to more people without charging interest rates that rival those of payday lenders.

We have witnessed a great victory, and an actual government u-turn (I won't rub it in), but we cannot afford to be complacent. The fight against bad debt has only just begun. 

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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With Boris gone, the next Tory PM will be dangerously tough on immigration

Talking tough on immigration is good for your leadership chances, but not for future trade deals. 

On 24 June, Boris Johnson had just pulled off the gamble of his life. The blonde pretender's decision to back Leave had helped bring an insurgent campaign to victory and force the Prime Minister's resignation. The political establishment was in smoking ruins, but the path to No 10 was clear.

Less than a week later, though, everything had changed. Johnson was forced to tell journalists at his campaign launch that he was pulling out. It seems the issue that scuppered him was immigration.

Johnson has never been a convincing border patrol guard. As the country digested Brexit, he wrote in The Telegraph that: "It is said that those who voted Leave were mainly driven by anxieties about immigration. I do not believe that is so."

His fellow Leave campaigner Michael Gove seems to have thought differently. A leaked email from his wife discussed the need for "specifics" on what many believe to be immigration controls. 

Announcing his campaign launch on Thursday morning - minutes after alerting Johnson to the fact - Gove declared that voters "told us to restore democratic control of immigration policy".

Of course, Gove is not alone in the contest to be PM of Brexit Britain. But with the Classics scholar Johnson out of the way, a consensus on a tougher immigration policy looks likely. 

A relaxed Theresa May (pictured) laid out her arguments on Thursday morning as well, and although she backtracked from earlier calls to quit the European Convention on Human Rights, she  is clearly playing to the audience when it comes to immigration. 

During the EU referendum campaign, she quietly backed Remain but nevertheless called for "more control" over EU citizens working in the UK.

At her leadership launch, she expressed a desire to cut net migration by tens of thousands each year. "Any attempt to wriggle out" of regaining control "will be unacceptable to the public", she said. 

Stephen Crabb, another contender, has already described ending free movement as a "red line", while Liam Fox wants an Australian-style points based system to apply to EU migrants. 

Of course, condemning "uncontrolled" EU immigration is one thing. Agreeing on whether immigration per se is too high is another. Some Leave campaigners argued they only wanted a level playing field for EU or non-EU migrants. 

But the Tory candidates face a bigger risk. The public may lap up anti-immigration rhetoric, the party members might vote accordingly, but it leaves little room to manoevre when it comes to negotiating trade deals with the European Union. Even the cool-headed German chancellor Angela Merkel has made it clear access to the single market is reserved for those who accept the free movement of people, as well as capital and goods.

If the successful candidate also wants to be successful in government, they will have to find a way of redefining the debate, quickly.