Government and PDL interest rates

[Mr $quandaŁot]

Why is it in this country that the Government allows loan sharks like Wonga to operate legally? In many European countries interest rates are capped, even at as 'low' as 50%!

But no, not here in the UK.

Arguments of people having nowhere else to go or having to use illegal loan sharks are not very clever IMHO. Is it any better having to use legal loan sharks? Existence of Wonga etc. doesn't stop people using illegal ones anyway.

I have heard rumours that some Tory MPs have a vested interest in Wonga. Surely, this could be clarified using the freedom for information act? This, of course, would apply to all PDL companies and political parties.

If this is true, then surely Kate and Sharon could start a big campaign to outlaw these legal sharks and MPs involved should be named and shamed!

LB site owners have done a great job in naming and shaming Retail Loss Prevention and their solicitors so I have all my faith in them delivering.

[FlamingParrot]

Re: Government and PDL interest rates

There may be changes now the FCA has replaced the Office of Faffing and Twaddle as someone used to refer to it. msl:

http://www.ft.com/cms/s/0/39745222-b...#axzz2xjikRSP3

The chancellor in November moved to put a cap on the amount of interest that the companies could charge, and Mr Wheatley said on Tuesday that the FCA was collecting data from lenders to work out an appropriate level for the cap.


The FCA will force lenders to carry out proper affordability checks and stop consumers from rolling over payday loans more than twice. Research by the Office of Fair Trading, which previously oversaw the sector, found that about half of lenders’ revenues came from rolled over loans.

With regards to the argument that payday lenders fill a gap in the market and that their closure would push people to use loan sharks, what did people do before they were around? After all, they haven't been around that long! There WAS life before PDLs, there will be life after them too! :grin:

As for vested interests in Wonga and other PDLs, I doubt a FOI request will stretch as far as finding out who owns shares in what company, plus there is the possibility that shares may be owned in someone else's name, for example, relatives, limited companies or investment funds.

[Amethyst]

Re: Government and PDL interest rates

It is a really tough call. Much as I hate PDL's I recognise they do serve a purpose.

Pushing for the affordability checks and credit checks etc, although needed, will result in the same vulnerable people who ended up with illegal loan sharks in the first place. There is a massive review underway of high cost short term credit lending through the FCA.

The cost of credit should and will be capped and the use of rollovers and CPA's limited.

We need the crisis and social loans back properly for low income families, ( as PDL's took off about the same time they were ditched) and we need a massive extension of credit unions.

[EXC]

Re: Government and PDL interest rates

Don't forget that in addition to the FCA the Competition Commission are looking at the Payday loan market and in some respects they are more powerful than any other regulatory body.

http://www.competition-commission.or...payday-lending

It was they (and not the FSA) who effectively put an end to the PPI market by banning the sale of it at the point of sale.

[Amethyst]

Re: Government and PDL interest rates

Don't forget that in addition to the FCA the Competition Commission are looking at the Payday loan market and in some respects they are more powerful than any other regulatory body.

http://www.competition-commission.or...payday-lending

It was they (and not the FSA) who effectively put an end to the PPI market by banning the sale of it at the point of sale.

The Competition and Markets Authority (CMA) brings together the Competition Commission (CC) and the competition and certain consumer functions of the OFT. The CMA takes on its full powers and responsibilities on 1 April 2014.

[Mr $quandaŁot]

Re: Government and PDL interest rates

I disagree in a sense that most PDL companies push vulnerable people further in debt. It is like taking medication which gives temporary relief but doesn't cure the disease - but makes it worse.

We should look at why people can't live within their means. I think the present and past governments as well as Bank of England are to blame. For the last 15 years or so we've been told that the rate of inflation is running at a couple of per cent, when in fact it's been running between 5-10%. There's no use of including technology in inflation basket. They should include the essentials what people need to live. You need to eat and keep your home warm but you do not necessarily need a plasma TV.

The government's cuts don't help either. Yes, welfare bill needs to be looked at and kept under control but this is not the time.

As Parrot says, people survived before the PDLs infested this country and would survive if they were outlawed or at least the rates kept at reasonable (whatever that is but it's not APR of 1,000%) level. 50% sounds good to me.

[Amethyst]

Re: Government and PDL interest rates

I disagree in a sense that most PDL companies push vulnerable people further in debt. It is like taking medication which gives temporary relief but doesn't cure the disease - but makes it worse.

Completely agree - PDLs do seem to have made debt far too easily accessible to people who wouldn't ever have gone near an illegal loan shark in the past.

We should look at why people can't live within their means. I think the present and past governments as well as Bank of England are to blame. For the last 15 years or so we've been told that the rate of inflation is running at a couple of per cent, when in fact it's been running between 5-10%. There's no use of including technology in inflation basket. They should include the essentials what people need to live. You need to eat and keep your home warm but you do not necessarily need a plasma TV.

The government's cuts don't help either. Yes, welfare bill needs to be looked at and kept under control but this is not the time.

As Parrot says, people survived before the PDLs infested this country and would survive if they were outlawed or at least the rates kept at reasonable (whatever that is but it's not APR of 1,000%) level. 50% sounds good to me.

Again completely agree.

[FlamingParrot]

Re: Government and PDL interest rates

Completely agree - PDLs do seem to have made debt far too easily accessible to people who wouldn't ever have gone near an illegal loan shark in the past.

This is very true. Apart from the fear of violence and association with illegal activities, loan sharks are nowhere nearly as easy to find, at least not for a lot of us. I wouldn't know where to start! :confused2: However, you can't miss the Wonga ads everywhere, amongst others. :smash:

Some borrowers may well be desperate and borrow to pay their rent, put food on the table or heat the house, however, some borrow for holidays or presents, or even to take advantage of sales and promotions. People wouldn't go to a loan shark to borrow for these purposes, but the PDL ads make it sound so easy!

[Guest]

Re: Government and PDL interest rates

It taken us seven years to arrive at the same conclusion that they did in most states of America and before that Canada, your right about the government having more than a little interest in the matter(check to see who the venture capitalists were that financed them).

In my opinion they knew full well that they would be the focus of the regulators sooner or later, unfortunately they had all their argument well rehearsed, they had used them before.
They knew which palms to grease they release there own guidelines in order to try and stop the government stepping in, trying to delay the inevitable, every week they can delay is another couple of mill in the bank.

[Guest]

Re: Government and PDL interest rates

I finally got around to watching the great debt debate on tv, last night. I had to turn it off, what a waste of time. Nobody seemed to address the reason why people use payday loans. They mentioned briefly that some 10% of the population were living hand to mouth and just one weeks pay away from loosing there home.
But they did not go the extra step and ask the question, what do these people do when the washing machine breaks down or the kids need a new school uniform or there is an illness and the bills need paying. These are the time when the loan shark or the PDL step in.

No one seems to want to address these issues. Ir is the same with the council tax bailiffs. Why is it that so many liability orders get issued to bailiffs, instead on just taking the money from benefits ?
The reason is because it would be illegal for them to do so, generally the resultant effect would take it below that allowed under human frights legislation, as being the minimum needed to live. So where are the debtors going to find the money to pay not only the outstanding bill but also the bailiff fees, and more importantly what on earth are we doing allowing an industry to exist which depends on the debt and misery of others, which brings us back to the PDL companies again.

[loulouxx]

Re: Government and PDL interest rates

I heard that the main share holder of wonga is a close friend of mr Cameron and was an old colleague of his. To me it seems that in scrapping crisis loans and social loans they are in a roundabout way privatising these with payday loans. Aged old Tory tradition the richer get richer poorer get poorer. In my experience in 2009 PDL seemed a lot more consumer friendly. When I was late not once did any of them raid my account and they took monthly payments willingly. From 2011 they became more aggressive in everyway and a lot more unscrupulous ones came on the market. Regulation needed in every to protect the vulnerable. They do fill a gap yes but then the sharks need to be weeded out and tighter regulations to the not so nasty ones. My dad was a shopsteward for fords GMB and was on the national committee and he still speaks to a lot of the stewards still there and he said its shocking that they have very little power anymore when it comes to hours, wages and overtime. Before if fords say took overtime away then it would be met with a fight but now it's accepted same with the zero hours contracts x