My article in this week’s Cornish Guardian will focus on
payday loans. It will be as follows:
With so many people struggling to make ends meet, I have
always found it distasteful that numerous firms have been able to make vast
profits by offering short-term payday loans at extremely high levels of
interest.
It is therefore great news that the new Financial Conduct
Authority (FCA) has forced Wonga to write off £220m of loans to customers.
I understand that loans to 330,000 people were cancelled in
their entirety, because the FCA found the “lender” – accused by some MPs of “legal
loan sharking” – had neglected to even check whether people could afford the
repayments. A further 45,000 customers will have interest and other punitive
charges reduced.
I have a great deal of sympathy for those families and
individuals, who have found themselves in difficulties after taking payday
loans. Some have even had their debts sold onto third parties like commodities.
But I have noting but contempt for firms such as Wonga –
which has charged “annualised interest rates of up to 5,853% a year” – and
intensified the problems of so many people.
I would personally like to see legislation to simply outlaw irresponsible
lending, though I do welcome that something is being done through the FCA.
The FCA’s Clive Adamson has said that its recent action against
Wonga should “put the rest of the industry on notice” and that “some firms
still have a way to go to meet our expectations.” But surely the FCA needs to
be even more active in scrutinising the activities of such firms.
Wonga may be the “biggest online” payday lender but there
are around 90 other such lenders, which are still active and, according to
experts, also failing to carry out appropriate tests on the affordability of
their loans.
Central government simply must take greater actions to
combat the activities of payday loan firms.
And it also has a responsibility to repair a society in
which it has allowed such “legal loan sharking” to flourish, because of its
austerity measures, welfare cuts and its failure to regulate the financial
services sector.
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