Legal Loan Sharks "Circling" the Poor

[Super Badnik]

Originally Posted by The Guardian

Some effects of this Tory government are easy to see. Unemployment is rising. Economic growth is stagnating. Public services are being decimated. And families across Britain are panicking about how to make ends meet.

Here's a less obvious outcome. Legal loan sharks are circling our poorest families. They're watching them struggle and they're sensing a business opportunity. Peter Crook, chief executive of Provident, is delighted with the way things are in austerity Britain. That's no surprise. Following the comprehensive spending review, his company's share prices rocketed by 5%.

Provident is one of the largest companies in the UK unsecured lending market. This market targets people for whom banks and credit cards are out of reach – mainly the low paid and people with poor credit histories – and it offers them short-term credit, with a typical APR of 272%. These companies make money by locking people into cycles of debt, interest on debt, late payment charges and interest on late payment charges.

My surgeries are full of people trapped like this. My constituency of Walthamstow is pockmarked by businesses like Provident, high-street shops offering payday loans and hire purchase agreements at an average rate of 444% – and sometimes 4000% or more. Just six companies control 90% of the market for home credit. This means that the 7 million Britons who are excluded from mainstream banking have no choice but to accept rates that even Boris Johnson has called extortionate.

While other parts of the economy stutter, this industry is booming, with a fourfold increase in payday lending since the recession started.

In 2005, senior members of this government including Nick Clegg, Vince Cable, Danny Alexander and Ed Vaizey all signed an early day motion calling for action on the interest rates these legal loan sharks charge. Now we are challenging them to take action. A cross-party group of MPs has secured a vote on the principle of introducing caps on the total costs of credit for British consumers, following good practice across the Americas and Europe. We have the backing of a wide range of consumer groups, charities, trade unions and religious groups, who recognise that every day these rates go unchallenged, debt and poverty get worse. We also have the support of many Tory and Liberal Democrat backbenchers.

But so far the government has refused to support our proposals, seemingly because of a kneejerk reaction against regulation. And yet they've already agreed to regulate some parts of the market. The coalition agreement promises action on excessive interest rates for store and credit cards. So why no action on behalf of those millions of people for whom this avenue of credit is closed? Cameron told us that his would be a "new politics", where "the national interest is more important than the party interest". By putting ideological concerns before the needs of the poor like this, the government is making his promises sound hollow.

An amendment has been tabled, watering down our proposals. Instead of committing to "introduce" caps, they'll commit to "consider introducing" them instead – too often civil service code for doing nothing. Those of us campaigning on this issue may reluctantly have to compromise to keep it alive. But whatever happens, we will put a marker down. The evidence is behind us. So is the weight of public opinion. Not even being out of office will hold the force of our arguments back.

Source

Appears to be written by an MP so theres some bias in there, but still, very sickening.

[interstellardave]

How sad that people who can least afford it are gouged the most. God, how much profit is enough?

[Mad Tony]

I think this article would have a little more validity if it didn't try and blame loan sharks on the current government. "some bias" is an understatement.

[Cochrane]

Originally Posted by Mad Tony

I think this article would have a little more validity if it didn't try and blame loan sharks on the current government. "some bias" is an understatement.

It doesn't blame loan sharks on the current government. It complains that the current government is not doing enough to stop them. While I'm not saying the article is unbiased, it is not quite as biased as you seem to think.

[Mad Tony]

Originally Posted by Cochrane

It doesn't blame loan sharks on the current government. It complains that the current government is not doing enough to stop them. While I'm not saying the article is unbiased, it is not quite as biased as you seem to think.

Some effects of this Tory government are easy to see. Unemployment is rising. Economic growth is stagnating. Public services are being decimated. And families across Britain are panicking about how to make ends meet.

Here's a less obvious outcome. Legal loan sharks are circling our poorest families.

This person is blatantly blaming loan sharks on the government, despite the fact that loan sharks have always preyed on the poor. It has nothing to do with what government is in but more to do with the economic situation.

[Cochrane]

Originally Posted by Mad Tony

This person is blatantly blaming loan sharks on the government, despite the fact that loan sharks have always preyed on the poor. It has nothing to do with what government is in but more to do with the economic situation.

Ah, OK, I missed that part. You're right.

Still, bias does not automatically invalidate all the points the article makes, especially when it urges greater regulation of those loan sharks.

[interstellardave]

Cochran is right... let's not argue about ancillary blame while the main point just gets lost in the shuffle. This is a reprehensible practice that needs to be addressed in some way.

[Super Badnik]

Originally Posted by Mad Tony

This person is blatantly blaming loan sharks on the government, despite the fact that loan sharks have always preyed on the poor. It has nothing to do with what government is in but more to do with the economic situation.

Actually I think it was suggesting it is an indirect 'consequnce' of the current government's actions that legal loan sharks have increased. Obviously they haven't just popped up with the current governemnt and New Labour should have dealt with them too.

[Mad Tony]

Originally Posted by Super Badnik

Actually I think it was suggesting it is an indirect 'consequnce' of the current government's actions that legal loan sharks have increased. Obviously they haven't just popped up with the current governemnt and New Labour should have dealt with them too.

But then we could look at what caused the current government to take those actions.

[Super Badnik]

Originally Posted by Mad Tony

But then we could look at what caused the current government to take those actions.

A wish to clear the governement's debts as soon as possible without hurting the bankers.