I am often inundated with requests from old school friends to join this and that group on Facebook. I don’t log in very often now – I’ve got a bit bored of reading updates about people’s online scrabble and mafia war scores – so I tend to accumulate a mass of them, from things like the ‘I love tea’ group to ‘I like scratching my back’ group etc (OK, so I made those up but you know what I mean!). Some of them I join, some I can’t be bothered to.
But there is one group I have just signed up to that I think everybody should join if they feel strongly about expensive credit. Ian Thomas, a brand consultant and blogger, has just started one called Let’s Stop 2356% APR Loans. He was so furious after seeing Quickquid’s TV advert for ‘payday’ loans at 2356 per cent typical APR that he started a protest group on the social networking site.
“I searched the web for any interest groups related to payday lenders and couldn’t find any,” he tells me. “It was the same at Facebook, so I set one up. It’s an issue that needed one. I know from personal experience that borrowing of this kind is a last resort. Often it is the absence of alternative sources of support like family, friends or banks – or simply because the social stigma of revealing their personal financial position is too embarrassing to contemplate for many people.”
Ian believes lenders are “exploiting” the misfortune of people who are struggling with their finances. “It’s easier to get into debt than save in Britain,” he says. “The interest payments only serve to compound individual and family’s personal financial problems, yet it is allowable – despite the lessons of the liquidity crisis. UK regulation continues to fail borrowers dismally, whereas the fair treatment of consumers has become a much more significant regulatory issue in savings and investments in recent years.”
During the credit crunch there seems to have been an explosion of adverts on our TV channels and radio stations for short-term high interest loans. My local radio station carries adverts for them and it makes my blood boil every time I hear them. As far as I’m concerned, these companies should not be allowed to advertise on TV or radio at all – end of story – and that’s why I’ve joined Ian’s group.
People who work in the industry argue that these high interest short-term loans are regulated by the Financial Services Authority, offer a much-needed life-line for people who have run out of cash before pay day comes and are a safer alternative to borrowing from a door-step loan shark. However, the charges are expensive and there is the danger that customers defer payment and run up large interest charges which they are unable to repay. Borrowing money from a local Credit Union or consulting the Citizen’s Advice Bureau or the Consumer Credit Counselling Service if you are experiencing serious debt problems are much better ideas in the long run. Check out a recent piece by MSN’s consumer champion Sarah Modlock about this and a useful article by the Consumer Credit Counselling Service.
The good news is that the Office of Fair Trading is investigating payday loans as part of an ongoing report into responsible lending and is expected to deliver its findings soon. Meanwhile Ian plans to write open letters to lenders including Quickquid and Wonga.com to call on them to cut their APRs and get MPs and consumer rights campaigners to back his campaign. “I am determined we can make a difference!” he says. Good on him!
If you feel strongly about this issue, then please make a stand by joining the Let’s Stop 2356% APR Loans group and helping Ian reach his target of 1,000 members or writing to your MP.
Have you used payday loans? What were your experiences? Leave a message and let me know.
|StumbleUpon||Technorati||Yahoo! My Web|