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 focusing on the famous few, we risk doing a disservice to all victims of child sexual abuse

There is a danger that we make it harder, not easier, for victims to come forward in future. 

Back in the 1970s when relations between journalists and police were somewhat different to today a simple ritual would be carried out around the country at various times throughout the week.

Reporters, eager for information for their regional newspaper, would take a trip to the local station and there would be met by a desk sergeant who would helpfully skim through details in the crime Incident Book.

Among the entries about petty thefts, burglaries and road accidents there would occasionally be a reference to an allegation of incest. And at this point the sergeant and journalist might well screw-up their faces, shake their heads and swiftly move on to the next log. The subject was basically taboo, seen as something ‘a bit mucky,’ not what was wanted in a family newspaper.

And that’s really the way things stayed until 1986 when ChildLine was set up by Dame Esther Rantzen in the wake of a BBC programme about child abuse. For the first time children felt able to speak out about being sexually assaulted by the very adults whose role in life was to protect them.

And for the first time the picture became clear about what incest really meant in many cases. It wasn’t simply a low level crime to be swept under the carpet in case it scratched people’s sensitivities. It frequently involved children being abused by members of their close family, repeatedly, over many years.

Slowly but surely as the years rolled on the NSPCC continued to press the message about the prevalence of child sexual abuse, while encouraging victims to come forward. During this time the corrosive effects of this most insidious crime have been painfully detailed by many of those whose lives have been derailed by it. And of course the details of the hundreds of opportunistic sexual assaults committed by Jimmy Savile have been indelibly branded onto the nation’s consciousness.

It’s been a long road - particularly for those who were raped or otherwise abused as children and are now well into their later years - to bring society around to accepting that this is not to be treated as a dark secret that we really don’t want to expose to daylight. Many of those who called our helpline during the early days of the Savile investigation had never told anyone about the traumatic events of their childhoods despite the fact they had reached retirement age.

So, having buried the taboo, we seem to be in danger of giving it the kiss of life with the way some cases of alleged abuse are now being perceived.

It’s quite right that all claims of sexual assault should be investigated, tested and, where there is a case, pursued through the judicial system. No one is above the law, whether a ‘celebrity’ or a lord.

But we seem to have lost a sense of perspective when it comes to these crimes with vast resources being allocated to a handful of cases while many thousands of reported incidents are virtually on hold.

The police should never have to apologise for investigating crimes and following leads. However, if allegations are false or cannot be substantiated they should say so. This would be a strength not a weakness.

It is, of course, difficult that in many of the high-profile cases of recent times the identities of those under investigation have not been officially released by the police but have come to light through other means. Yet we have to deal with the world as it is not as we wish it would be and once names are common knowledge the results of the investigations centring on them should be made public.

When it emerges that someone in the public eye is being investigated for non-recent child abuse it obviously stirs the interest of the media whose appetite can be insatiable. This puts pressure on the police who don’t want to repeat the mistakes of the past by allowing offenders to slip through their hands.  And so there is a danger, as has been seen in recent cases, that officers lack confidence in declaring there is a lack of evidence or the allegations are not true. 

The disproportionate weight of media attention given to say, Sir Edward Heath, as opposed to the Bradford grooming gang sentenced this week, shows there is a danger the pendulum is swinging too far the other way. This threatens the painstaking work invested in ensuring the public and our institutions recognise child abuse as a very real danger. 

Whilst high profile cases have helped the cause there is now a real risk that the all-encompassing focus on them does both victims of abuse and those advocating on their behalf a fundamental disservice.

As the public watches high -profile cases collapsing amidst a media fanfare genuine convictions made across the country week in week out go virtually unannounced. If this trend continues they may start to believe that child sexual abuse isn’t the prolific problem we know it to be.

So, while detectives peer into the mists of time, searching for long lost clues, we have to face the unpalatable possibility that offences being committed today will in turn only be investigated fully in years or decades' time because there is not the manpower to deal with them right now.

So, now the Goddard Inquiry is in full swing, taking evidence about allegations of child sex crimes involving ‘well known people’ as well as institutional abuse, how do we ensure we don’t fail today’s victims?

If they start to think their stories are going to be diminished by the continuing furore over how some senior public figures have been treated by the police they will stay silent. Therefore we have to continue to encourage them to come forward, to give them the confidence of knowing they will be listened to.

If we don’t we will find ourselves back in those incestuous days where people conspired to say and do nothing to prevent child abuse.

Peter Wanless is Chief Executive of the NSPCC.