Payday loan sharks

I get put up for industry awards now and then and when the competition is particularly slack, I occasionally am lucky enough to win. Sometimes I dread the thought of winning something like the “Industry Legend” as I was nominated for in one such event recently. I so didn’t want it that I didn’t go.
Other times I feel I deserve a pat on the back, take one for the team, something like that. About a year ago, I was put up for an Entrepreneur of the Year award and lost out to the bloke behind Wonga. I wasn’t so much disappointed for myself but staggered that his was considered a commendable business. When would this false belief stop, I wondered?
Hopefully that time has now come with the publication of the Office of Fair Trading report on payday lending which has busted the myth that we shouldn’t worry about the ugly 4000% APRs cited because it’s only for a few days. We now know that over a third of all loans are rolled over at least once which is where the big interest rates kick in and half of the lenders’ income is derived from defaulters – so it’s good for them not to be too meticulous on people’s ability to repay on time.

There probably is a legitimate business proposition for families who genuinely just need to be covered for a couple of days to allow food on the table or rent to be paid. The report’s recommendations don’t go far enough; it’s asked for better checks and balances. What they should say is those who have slack assessment criteria should not allowed to be called payday lenders and be slapped with a loan shark tag instead.
The Wongas of the world may posture that they are helping people but the penury that so many customers end up from a seemingly painless process loudly tells us otherwise. Politicians again are missing a trick here: rather than call for a tax on the super-rich, let’s slap a big one on the super-immoral.

About Iqbal Wahhab

Founder of Roast Restaurant, Borough Market.
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One Response to Payday loan sharks

  1. Iqbal, thank you for highlighting this most unfortunate state of affairs to your followers whom may otherwise may not have had any awareness of the underworld of such lenders. Loan sharks by their very nature offer loans as you say at extremely high interest rates, they shirk on the border of illegal activity with this predatory lending – all of which has been bought to the nation’s attention by Stella Creasey MP, who requests an overhaul of the legal loan sharking rife in the UK. The fact that the Wonga fellow was deemed to have bought more to entrepreneurialism than yourself is indicative of the acceptance of such activities. I have seen too many of my most vulnerable clients fall prey to the false security of a quick loan then only to be bombarded with offers of further lending at quite simply preposterous rates.

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