Finally - a bill that could actually do something to regulate the payday lending industry

Blomfield's private members' bill includes measures to set new rules around the affordability of loans, payday loan advertising, debt collection and payment, debt support, and penalties for companies who fail to comply with existing regulator guidance.

It's Monday 1 June, the government are under pressure to do something about the payday lending industry, a summit is set up, but before proceedings even begin it's noted that the discussion will not tackle modifying the price of high cost credit. Instead it will be a light conversation on what cosmetic changes can be agreed to.

On the same day Wonga's chief executive Errol Damelin told an audience at a conference on money banking and finance hosted by Wired magazine in Canary Wharf: "We'd love as serious a regulator as possible to help understand the business, and the more proactively engaged our regulators are the better."

He's talking about the Office of Fair Trading (OFT), the same regulators as the ones who earlier in the year threatened tougher compliance checking before sending letters out to each payday lender operating in the UK. He's also talking about the same OFT who Wonga had to write an open letter to informing them that they had not sent over any “specific information” for them yet.

This is why I support the private members' bill by Paul Blomfield MP, which gets its second reading this Friday. Left up to the current administration very little would get done to the light-touch regulatory structure over this controversial industry. The outcome of the summit is still more waiting around, regulators sitting on their hands, action to properly address high cost credit not being carried out.

Blomfield's bill includes measures to set new rules around the affordability of loans, payday loan advertising, debt collection and payment, debt support, and penalties for companies who fail to comply with existing regulator guidance.

The details and strengths of the bill are straightforward. The Financial Conduct Authority (FCA), who take over from the OFT on regulating payday lenders in April 2014, will be able to cap the cost at which a lender can charge you for credit – which at the moment is around £30-35 per every £100 borrowed over a 30 day period – to a reasonable proportion of a borrower's income.

Consider now how unreasonable this cost is today. Let's say you take out £100 from a payday lender, typically you can end up paying back around £130, provided it's paid back on time. If you arrange an authorised overdraft of £100 from your bank, for example, you would pay back £101.60, which includes the £100 principle and £1.60 in interest (though many banks allow overdrafts of this cost to be interest or fee-free).

Let's take another example. If you take out a payday loan of £300 (just above the average £270 which was borrowed in 2012) you would pay back £390 if you paid back on time after 30 days. With a credit union loan of £300 it would cost £4.47 in interest. Paying back £304.47 rather than £390 is a no-brainer.

The other strengths of the bill include setting advertising standards for the industry showing how much you could spend on a loan from a payday lender in pounds and pence, rather than at the annualised percentage rate (APR). Advertising would also have to show a "health warning" sign, to show that it is rarely the best form of credit to apply for in hard times.

The bill also calls for a freeze on all charges when a person with a payday loan misses a payment, the obligation for lenders to signpost free impartial advice on debt, and enforcement powers to be determined, such as compensation, if the details of this Act (if it becomes an Act) are breached.

What Paul Blomfield MP has done in his bill is absolutely necessary. The new FCA regulation was supposed to have teeth but as we find out more of the detail there are already gaps emerging. Furthermore the government, though in principle wanting to tackle predatory lending, are flagging. This bill is a corrective to all that.

A sign for a loan shop on Brixton High Street in London. 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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In the 1980s, I went to a rally where Labour Party speakers shared the stage with men in balaclavas

The links between the Labour left and Irish republicanism are worth investigating.

A spat between Jeremy Corbyn’s henchfolk and Conor McGinn, the MP for St Helens North, caught my ear the other evening. McGinn was a guest on BBC Radio 4’s Westminster Hour, and he obligingly revisited the brouhaha for the listeners at home. Apparently, following an interview in May, in which McGinn called for Corbyn to “reach out beyond his comfort zone”, he was first threatened obliquely with the sack, then asked for a retraction (which he refused to give) and finally learned – from someone in the whips’ office – that his party leader was considering phoning up McGinn’s father to whip the errant whipper-in into line. On the programme, McGinn said: “The modus operandi that he [Corbyn] and the people around him were trying to do [sic], involving my family, was to isolate and ostracise me from them and from the community I am very proud to come from – which is an Irish nationalist community in south Armagh.”

Needless to say, the Labour leader’s office has continued to deny any such thing, but while we may nurture some suspicions about his behaviour, McGinn was also indulging in a little airbrushing when he described south Armagh as an “Irish ­nationalist community”. In the most recent elections, Newry and Armagh returned three Sinn Fein members to the Northern Ireland Assembly (as against one Social Democratic and Labour Party member) and one Sinn Fein MP to Westminster. When I last looked, Sinn Fein was still a republican, rather than a nationalist, party – something that McGinn should only be too well aware of, as the paternal hand that was putatively to have been lain on him belongs to Pat McGinn, the former Sinn Fein mayor of Newry and Armagh.

According to the Irish News, a “close friend” of the McGinns poured this cold water on the mini-conflagration: “Anybody who knows the McGinn family knows that Pat is very proud of Conor and that they remain very close.” The friend went on to opine: “He [Pat McGinn] found the whole notion of Corbyn phoning him totally ridiculous – as if Pat is going to criticise his son to save Jeremy Corbyn’s face. They would laugh about it were it not so sinister.”

“Sinister” does seem the mot juste. McGinn, Jr grew up in Bessbrook during the Troubles. I visited the village in the early 1990s on assignment. The skies were full of the chattering of British army Chinooks, and there were fake road signs in the hedgerows bearing pictograms of rifles and captioned: “Sniper at work”. South Armagh had been known for years as “bandit country”. There were army watchtowers standing sentinel in the dinky, green fields and checkpoints everywhere, manned by some of the thousands of the troops who had been deployed to fight what was, in effect, a low-level counter-insurgency war. Nationalist community, my foot.

What lies beneath the Corbyn-McGinn spat is the queered problematics of the ­relationship between the far left wing of the Labour Party and physical-force Irish republicanism. I also recall, during the hunger strikes of the early 1980s, going to a “Smash the H-Blocks” rally in Kilburn, north London, at which Labour Party speakers shared the stage with representatives from Sinn Fein, some of whom wore balaclavas and dark glasses to evade the telephoto lenses of the Met’s anti-terrorist squad.

The shape-shifting relationship between the “political wing” of the IRA and the men with sniper rifles in the south Armagh bocage was always of the essence of the conflict, allowing both sides a convenient fiction around which to posture publicly and privately negotiate. In choosing to appear on platforms with people who might or might not be terrorists, Labour leftists also sprinkled a little of their stardust on themselves: the “stardust” being the implication that they, too, under the right circumstances, might be capable of violence in pursuit of their political ends.

On the far right of British politics, Her Majesty’s Government and its apparatus are referred to derisively as “state”. There were various attempts in the 1970s and 1980s by far-right groupuscules to link up with the Ulster Freedom Fighters and other loyalist paramilitary organisations in their battle against “state”. All foundered on the obvious incompetence of the fascists. The situation on the far left was different. The socialist credentials of Sinn Fein/IRA were too threadbare for genuine expressions of solidarity, but there was a sort of tacit confidence-and-supply arrangement between these factions. The Labour far left provided the republicans with the confidence that, should an appropriately radical government be elected to Westminster, “state” would withdraw from Northern Ireland. What the republicans did for the mainland militants was to cloak them in their penumbra of darkness: without needing to call down on themselves the armed might of “state”, they could imply that they were willing to take it on, should the opportunity arise.

I don’t for a second believe that Corbyn was summoning up these ghosts of the insurrectionary dead when he either did or did not threaten to phone McGinn, Sr. But his supporters need to ask themselves what they’re getting into. Their leader, if he was to have remained true to the positions that he has espoused over many years, should have refused to sit as privy counsellor upon assuming his party office, and refused all the other mummery associated with the monarchical “state”. That he didn’t do so was surely a strategic decision. Such a position would make him utterly unelectable.

The snipers may not be at work in south Armagh just now – but there are rifles out there that could yet be dug up. I wouldn’t be surprised if some in Sinn Fein knew where they are, but one thing’s for certain: Corbyn hasn’t got a clue, bloody or otherwise. 

Will Self is an author and journalist. His books include Umbrella, Shark, The Book of Dave and The Butt. He writes the Madness of Crowds and Real Meals columns for the New Statesman.

This article first appeared in the 25 August 2016 issue of the New Statesman, Cameron: the legacy of a loser