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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“It feels like a betrayal”: EU citizens react to Jeremy Corbyn’s migration stance

How do Labour-supporting European migrants in the UK feel about their leader wanting to control EU migration?

“This feels a bit different from the man I had campaigned for,” says Eva Blum-Dumontet. “It felt like he was on the side of the group that matters, regardless of whether they were actually going to make him gain voters or not. He was on the side of what seemed right.”

Blum-Dumontet is a 26-year-old EU citizen who has been in the UK for five years. She works as a researcher for a charity and lives in north-east London’s Walthamstow, where she is the local Labour party’s women’s officer.

She joined Labour just before the 2015 general election, and campaigned for Jeremy Corbyn during his leadership bid that year. She spent one and a half months that summer involved in his campaign, either phone banking at its headquarters at the Unite union building, or at campaign events, every other evening.

“When he suddenly rose out of nowhere, that was a really inspiring moment,” she recalls. “They were really keen on involving people who had recently arrived, which was good.”

“Aside from the EU, I share all of his views”

Blum-Dumontet voted for Corbyn in both of Labour’s leadership elections, and she joined Momentum as soon as it was set up following Corbyn winning the first one in 2015. But she left the group two months ago.

She is one of the roughly three million EU citizens living in the UK today whose fate is precarious following the EU referendum result. And she doesn’t feel Corbyn is sticking up for her interests.

Over the weekend, the Labour leader gave an interview that has upset some Labour-supporting EU migrants like her.

Corbyn reiterated his opposition to staying in the single market – a longstanding left-wing stance against free market dominance. He added that his immigration policy “would be a managed thing on the basis of the work required” rather than free movement, and, in condemning agencies exploiting migrant workers, he said:

“What there wouldn’t be is wholesale importation of underpaid workers from central Europe in order to destroy conditions, particularly in the construction industry. You prevent agencies recruiting wholescale workforces like that; you advertise for jobs in the locality first.”

Corbyn also emphasised that Labour would guarantee the rights of EU nationals to stay in Britain – including the right of family reunion – and that there would still be Europeans working here and vice versa. But, for some in his party who hail from Europe, the damage was done.

“I feel like he’s now trying to signal more and more that he’s not on all sides, he’s on the side of people who are just scared of migrants,” says Blum-Dumantet, who will nevertheless stay in the party to try and change the policy. “The idea that he is willing to engage in this whole dog-whistling immigration fear feeling is a bit disturbing.”

She stresses that, “aside from the EU, I share all of his views”, but adds:

“I feel like he’s chosen his socialist utopia – and I don’t mean that as a bad thing; I’m a socialist as well – over the reality of the concrete lives of three million people. For us, this is not about some abstract ideal, it’s about our lives, whether we can get jobs here, whether we can stay here. And for the sake of his ideal, he’s sacrificing that. That does feel like a betrayal.”

***

Other EU migrants who initially supported Corbyn also feel let down. Sabrina Huck, the London representative of Labour’s youth wing Young Labour, moved here from Germany in February 2014.

Having joined the party that year, she voted for Corbyn in the first leadership election, “particularly because of things like being an internationalist, talking about migrant solidarity”.

Huck, 26, who lives in south London and works in public affairs, began to change her mind about him she discovered his Eurosceptic views. “It’s kind of my fault because I didn’t really do the research properly on him, I guess!” she laughs.

“I understand the argument that we have put downward wage pressure on some jobs”

Now, she feels “disappointed” in Corbyn’s comments about “wholesale importation” of workers. “The way he articulates himself – it doesn’t sound like what I wanted to hear from a Labour leader, particularly somebody who’s been a proud internationalist, proud migrant rights campaigner,” she tells me.

“I think the way he was making his point about wages was laying the blame way too much with workers and not with the bosses, basically.”

Huck notes that Corbyn is against the single market because of his socialist view of the EU as a “capitalist club”, rather than concern about borders. But she feels he’s using “the immigration argument” to sound mainstream:

“I feel like he’s using it as an opportunity to further his own ideological goal of leaving the single market by tying that to an argument that goes down well with the Leave-voting public.”

***

However, other Labour-leaning EU migrants I speak to do not feel Corbyn’s genuine motive is to bring immigration down – and are more understanding of his comments.

“I appreciate and understand the argument that we have put downward wage pressure on some – particularly blue collar or poorer paid – jobs, that is the nature of mass migration,” says a 29-year-old Czech who works for the government (so wishes not to be named), and has lived here since 2014. She believes his comments were made to “appeal to the hard left and Ukip types”, and has left the Labour party. But she adds:

“I can understand how communities suffering through a decade of stagnant wage growth and austerity are looking for a scapegoat, easily found in the form of migrants – particularly in a country where minimum wage and labour protections are so weak legislatively, and so poorly enforced.”

She also is sceptical that a “mass deportation” of EU migrants from Britain is likely to happen. “The optics are too bad, at a minimum,” she says. “It would look too much like the 1930s. What would the government do? Put us all on boats back to Europe?”

“I kind of shrugged off those comments and they didn’t bother me massively”

“I think they [Labour] are feeling their way around the issue [of Brexit] and are listening for public sentiment,” says Agnes Pinteaux, a Hungarian-born 48-year-old who moved to Britain in 1998. “But reconciling their hardcore Brexit support, those who just hate immigrants, those who want ‘sovereignty’, and those who want Brexit ditched altogether is going to be impossible.”

“I think the debate about the ethics of free movement of labour is a legitimate one, but it has to be rooted in human rights and dignity,” says Anna Chowrow, a 29-year-old third sector financial manager who moved from Poland to Scotland in 2007, adding:

“I was thrilled when Jeremy Corbyn was first elected Labour leader, and I have admiration for his principled approach. [But] I am in disbelief that these comments – akin to ‘British jobs for British workers’ – were made by him. The dehumanising language of ‘importation’ and ‘destruction’ is beyond disappointing.”

***

Finding EU citizens in Britain who are entirely sympathetic to Corbyn’s comments is difficult. Forthcoming defenders of his stance are hard to come by, suggesting that it’s a minority view among Europeans living in Britain. But there are some who continue to back him.

“I like Jeremy Corbyn’s authenticity. He comes across as genuine and honest, and I agree with most of his ideas. Contrary to the majority of politicians, he’s actually not afraid of coming across as a human being,” says Teresa Ellhotka, 24, who moved to the UK from Austria in 2016 and works in PR.

“His ideas and visions are, in my opinion, still very progressive”

“I kind of shrugged off those comments and they didn’t bother me massively,” she says of Corbyn’s stance on EU migrants. “My mind about Jeremy Corbyn hasn’t changed drastically as his ideas and visions are, in my opinion, still very progressive and I admire that he is dedicated to change but in a human way, and doesn’t suggest fighting fire with fire – as many other politicians, and people, seem to do.”

Ellhotka admits to being “a little surprised, as I did not expect this stance from him at all”, but feels there has been “so much back-and-forth” on the issue that she’s stopped worrying about what politicians say.

“Nobody seems to know what exactly is going to happen anyway.” The only thing, perhaps, that all politicians – and their voters – can agree on.

Anoosh Chakelian is senior writer at the New Statesman.