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.