ONE can do worse than look to Dickens for a life coach.
If you are a Scot of a certain generation, for example, there is a strong chance that the teachings of a certain Mr Micawber featured early and prominently in your upbringing, usually when pocket money did not last the week and an emergency sub was required.
Yes, before Adam Smith could have an influence, before Marx, Keynes, Friedman or Christine Lagarde had a look in, the financial teachings of the David Copperfield character had been burned into the consciousness of many a young Scot as surely as a rancher brands a steer.
All together now: "Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence]: result, happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six: result, misery."
Misery. Except, that is, for payday loan companies. They could not be more delighted if a person's income does not match their expenditure, for into that gap they jump with easy access loans at interest rates so high they are a danger to passing satellites. To borrow £150 for 18 days from Wonga, for example, will incur interest of £27.99. That works out at an interest rate of 365% pa, or 1% a day.
Finally, action has been promised. The Financial Conduct Authority, which takes over the regulation of consumer credit next April, has warned firms in the sector that tougher regulation is coming, and that they had better act soon. "The clock is ticking," says Martin Wheatley, FCA chief executive. Among the reforms proposed are affordability checks and the power to ban misleading adverts.
You might wonder how the industry was ever able to grow so big, so quickly, without such basic rules being in force in the first place. The simple answer is that, for a long time, only the poorest and weakest were at the sharp end of the industry's practices. The poor are always with us, was the unspoken script, and getting into trouble with payday loans was just another sign of their fecklessness. No-one was forcing them to take the money, after all.
How times are changing, and fast. The old certainties and prejudices are coming under strain as an increasing number of people find themselves on the wrong side of Micawber's equation.
Given the UK Government's addiction to austerity, and the Conservative Party's determination to drive people off benefits, that customer pool can only widen. To borrow a phrase from the old Lottery adverts, when next it becomes someone's fate to have to borrow money at punishing rates of interest, it could be you. In that situation, what the FCA is proposing is only a fraction of what will be required if misery is not to spread like damp on a council house wall.
Even Dickens might have been struck dumb with amazement at how payday lenders have been allowed to flourish in this recession. Moneylenders have never had it so good. They can advertise on television, making a decision to take out a loan seem on a par with choosing a new soap powder. They can set up shop in high streets abandoned by retailers that have gone bust. No longer do they have to call door to door, having whispered conversations with Mrs Smith out of the earshot of the children, or haunt pubs and betting shops to catch Mr Smith before he blows his wages. It is all out in the open now, everything is shiny and hi-tech. One click and that's it. Repayments are only ever a call on someone's bank account away.
Credit has traditionally been to the British economy what air is to a balloon. But as more and more household finances threaten to go pop, the reliance on credit has become the stuff of nightmares waiting to happen. In the three months to July this year, 400 people a month sought help from Citizens Advice Scotland about a payday loan. People are getting into debt not to buy luxuries but to meet the costs of basics.
The Debt Advisory Centre Scotland said this week that one in 10 Scots - more than half a million people - borrowed money to buy food in July. When it came to 18-24-year-olds (the ones who, under David Cameron's plans, would be denied housing or employment benefits if they were not in work or education), the rate was one in five. Credit cards are already taking the strain of heating and electricity bills, and that is before winter sets in.
What is being proposed by the Financial Conduct Authority will begin to tackle some of the worst excesses of payday lenders, but there remains the fundamental question of a cap on interest rates.
Lenders like to argue that if their profits are cut the sector will shrink, and those in need will be forced into the clutches of illegal loan sharks. Yet a 2012 study by the Centre For Responsible Credit showed that when a cap was introduced in Japan, there was no evidence that illegal lending increased. The FCA has promised to look at a cap next April. That moment cannot come too soon.
In defending themselves against attacks, loan companies have a tendency to take on an aggrieved air. One can have a measure of sympathy. Not much, but some. Life has a habit of springing nasty financial surprises. Redundancy, bigger than expected bills, or other misfortunes mean that there will always be times when income falls short of expenditure. In the absence of enough credit unions to meet the need, and with banks increasingly reluctant to lend to small businesses never mind individuals, loan companies have become an emergency financial service for many. If not for them, to be blunt, some children would not eat tonight.
But what an ugly pass we have reached when it has become acceptable for private, profit-making companies to play such a fundamental role in meeting basic human needs. If some views hold sway, this is just the beginning.
This is the age of austerity, a rolling back of the so-called "something for nothing" society. Yet every cut creates a need, a shortfall. Who will meet that need, make up that shortfall? People will have to turn somewhere for help. In all the tough talk coming out of Manchester this week at the Conservative Party conference, no consideration was given to that. Deterrence, the stick, is the only game in town.
Which is fine for those who have secure jobs, hearty pensions, money in bricks and mortar, or a safety net in the form of friends or relatives willing to help out.
As for the rest, Dickens only knows what will happen to them.
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