MSE News: MP to step-up payday loan cost cap moves

Consumerist

simon_the_poet wrote: »

The facts seem to support my conclusion. Not saying that under certain circumstances a savvy operator may be able to use these to save a couple of quid, what I am saying is that any benefit is greatly outweighed by the harm done to the poorer and less advantaged sections of the community.
Simon

But are PDLs any more horrendous than banks charging £5 per day for being a few pound overdrawn on a current account?

simon_the_poet

Consumerist wrote: »

But are PDLs any more horrendous than banks charging £5 per day for being a few pound overdrawn on a current account?

I suppose if you don’t have an overdraft facility, and the money they are demanding would otherwise be spent on food for the children, it may be considered as worse.
Simon

Consumerist

I rest my case.

The real truth is that if people can't get cash from PDL companies to tide them over then they will be driven into the arms of those unlicensed lenders of which you speak.

simon_the_poet

Consumerist wrote: »

I rest my case.

The real truth is that if people can't get cash from PDL companies to tide them over then they will be driven into the arms of those unlicensed lenders of which you speak.

We have laws to control unliscenced lenders, that is the whole point.

Simon

JimmyTheWig

simon_the_poet wrote: »

But these people are loan sharks.

No, these companies will _not_ break your kneecaps if you can't pay.

With the greatest of respect, are you really saying that unlimited rollovers should be allowed because the debtor may not be able to repay the inflated interest they have already accrued? This is of course the way loan sharks have always operated.

I guess I am. I agree it's a far from ideal situation, but I do think that they are better than loan sharks.

My solution, as I have said before, is to limit the amount charged for the loan (rather than the typical APR) by increasing fees and reducing interest. I guess this is similar to ampafc's last point, though I wouldn't expect it to become interest _free_ at any point!

simon_the_poet

JimmyTheWig wrote: »

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No, these companies will _not_ break your kneecaps if you can't pay.


I guess I am. I agree it's a far from ideal situation, but I do think that they are better than loan sharks.

My solution, as I have said before, is to limit the amount charged for the loan (rather than the typical APR) by increasing fees and reducing interest. I guess this is similar to ampafc's last point, though I wouldn't expect it to become interest _free_ at any point!

I am afraid you are a bit out of date, until recently I worked fighting these loan sharks; in general they don't break people’s knees anymore. They rely on good old harassment and intimidation, just like the PDL companies.

Yes i think you are right the total charge for credit must be limited also the amount of roll overs.
All these arguments have been gone over in the USA and Canada, without exception they have all regulated to a greater or lesser extent.
The same will happen here eventually , it is just a matter of limiting the amount of damage done until that time.
Simon

simon_the_poet

Hi
As mentioned earlier, many of us have an issue about how these loans are advertised. Firstly the fantasy that these loans are in some way targeted at people who are financially stable but who are experiencing a brief financial blip.
The problem is that at the moment these companies are doing a very good job of muddying the waters regarding these loans. I don’t think anyone would argue that a short term loan facility should be available, and also that because of its nature the loan would exhibit a high APR, that though is far from the point.
The fact is that the companies do not want debtors to be able to repay the initial loan. This is the way loan sharks operate, they depend on the original loan being defaulted then offer a roll over at an extra cost, in no time at all the debtor is borrowing his own money and paying interest on it.
As said you only have to look at where these loans are advertised to see the truth of this. The availability of these loans to people with proven poor records of repayment also illustrates this.
I have been in touch with the OFT regarding the advertising of these loans. Their problem is that they cannot regulate advertisers unless they are providing a brokerage service and therefore require licensing. A slim ray of hope was raised in a recent correspondence which stated,” The OFT has recently consulted on draft Guidance for Credit brokers and credit intermediaries. In its current draft format the guidance does suggest there is the potential for 'click through' to creditors' websites to be construed as brokerage, depending on the nature and presentation of any web-links. Whether or not a web-site is engaged in credit brokerage will depend on the way in which it operates, and will be a question of fact in each case. “
This may be a wakeup call for some sites that advertise these loans, we can only hope.
Peter