I thought I was finished with my comments on payday lenders but it looks like the problem has not gone away yet. More news out recently suggests that another lender has been fined by the Financial Conduct Authority, this time for imposing ‘unfair fees’ on its customers, including charging them £50 to transfer them to the firms’ own debt collection business.
It’s another in a long line of failures from a succession of payday lenders, always with the excuse that it’s getting better and they are providing a service that no-one else is providing so we need to keep them. A report out from the Consumer Finance Association, the payday lenders own trade body, a few weeks ago concluded that restricting access to short term credit would present new risks for low and middle income borrowers. You would expect them to say that, and it’s probably true, but the answer is not to continue to allow these same lenders to charge exorbitant rates of interest to borrowers who can ill-afford to repay it.
Some payday lenders have taken huge steps to deal with the problems they faced but the fact that the regulator still sees the need to slap others down with huge fines would suggest that too many are still getting away with high rates and sloppy practices.
Of course there are lots of people need access to money, and that access, where it is justified, should be made available by low cost loans offered by our Credit Union Network. Much more should be made of the network of Credit Unions that run the length and breadth of the country. They have, in the past, been hampered by restrictive growth, membership and advertising rules but they engender a level of trust these days that most mainstream banks can only dream of.
And the banks have their part to play in all of this as well. They need to be forced to lend. That is one of their main purposes and we are at least part-owners of many of them today so they should be put to work helping us.