Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • Former MSE Helen
    • By Former MSE Helen 25th Nov 13, 10:59 AM
    • 2,324Posts
    • 971Thanks
    Former MSE Helen
    MSE News: Finally! Government to cap costs of payday loans
    • #1
    • 25th Nov 13, 10:59 AM
    MSE News: Finally! Government to cap costs of payday loans 25th Nov 13 at 10:59 AM
    "George Osborne has today announced a cap on the costs of controversial payday loans..."

    Read the full story:

    Finally! Government to cap costs of payday loans




    Click reply below to discuss. If you havenít already, join the forum to reply. If you arenít sure how it all works, read our New to Forum? Intro Guide.

Page 2
    • Pincher
    • By Pincher 26th Nov 13, 12:57 AM
    • 6,516 Posts
    • 2,491 Thanks
    Pincher
    This situation always reminds me of a documentary about the American Midwest. The rail companies built the tracks to open up the interior. The government gives land away, sometimes for free, to entice people into getting a bank loan and become farmers. Full of dreams, simple folks take it on without understanding the economics and get further and further into debt. The people who sells machinery and seeds, the banks and the rail company just repossess them and ship in fresh meat from the East.

    In England, the analogy is the property game. Instead of providing a stable rent controlled environment like the Europeans, the state itself is complicit in encouraging home ownership by people who cannot afford it. The economic activity generated by the property market benefits lenders, builders, agents of all kinds, and ultimately the Treasury. Provided property prices keep rising, and more first time buyers pile in, the system grinds on. The problem is, prices are now so high, that low income households spend all their money on housing, which are money pits with a bottomless hole. If you remove the cost of housing with a magic wand, you'll see empty Pay Day Loan shops closing across the country.

    Reduce the population. One child policy per adult, so a couple can have two children. More than two, tax them. More than four is a crime against society: deport them to Australia.

    There is a really good idea moving forward: Institutional landlords.
    Pension companies interested in long term cash flow build and run energy efficient communities. The rent pays pension annuities. OAPs who are not keen on owning and maintaining their own property can exchange it for purpose built retirement homes, with resident carers on site, freeing up housing for the general market. As always, needs proper scrutiny against exploitation.
    Last edited by Pincher; 26-11-2013 at 1:16 AM.
  • John1993
    Competitive markets don't usually get referred to the Competition Commission for investigation http://www.competition-commission.org.uk/our-work/directory-of-all-inquiries/payday-lending
    Originally posted by Alpine Star
    Well yes, they do, which is why it's an investigation, not a sentencing.
    • N1AK
    • By N1AK 26th Nov 13, 7:42 AM
    • 2,851 Posts
    • 3,796 Thanks
    N1AK
    Competitive markets don't usually get referred to the Competition Commission for investigation http://www.competition-commission.org.uk/our-work/directory-of-all-inquiries/payday-lending
    Originally posted by Alpine Star
    The OFT referred Pay Day Lenders to the competition commission because of issues with how some of them operated. They were not referred to the competition commission because due to concerns about lack of competition so yes apparently it isn't unusual, you just didn't know it.

    Also remember that the OFT effectively forced 50 PDL firms out of the market because of their practices. You don't generally force people out of markets if you are worried about lack of competition.
    Having a signature removed for mentioning the removal of a previous signature. Blackwhite bellyfeel double plus good...
    • N1AK
    • By N1AK 26th Nov 13, 7:44 AM
    • 2,851 Posts
    • 3,796 Thanks
    N1AK
    Reduce the population. One child policy per adult, so a couple can have two children. More than two, tax them. More than four is a crime against society: deport them to Australia.
    Originally posted by Pincher
    It would be a start if we stopped subsidising children let alone charge for them however given the storm about restricting child benefit fro higher tax payers imagine how popular politically it'd be to do it to everyone
    Having a signature removed for mentioning the removal of a previous signature. Blackwhite bellyfeel double plus good...
    • gadgetmind
    • By gadgetmind 26th Nov 13, 7:56 AM
    • 10,921 Posts
    • 8,909 Thanks
    gadgetmind
    The problem is, prices are now so high, that low income households spend all their money on housing
    Originally posted by Pincher
    All of their money? Really? 100% goes on housing leaving nothing for anything else?

    Reduce the population. One child policy per adult, so a couple can have two children. More than two, tax them.
    I think you might be happier in China than in the UK.

    More than four is a crime against society: deport them to Australia.
    And the Daily Mail web site rather than MSE.

    There is a really good idea moving forward: Institutional landlords.
    If it's such a good idea, why not raise some funds and make it happen?
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • Scrootum
    Legbreaker Don from Deptford has just ordered a new Merc after hearing the news.

    Happy days.
    • gadgetmind
    • By gadgetmind 26th Nov 13, 8:43 AM
    • 10,921 Posts
    • 8,909 Thanks
    gadgetmind
    given the storm about restricting child benefit fro higher tax payers
    Originally posted by N1AK
    That's because it was implemented badly. Tying it to highest salary rather than household income, and having a 100% loss "cliff edge" was what caused the storm.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • cepheus
    • By cepheus 26th Nov 13, 9:06 AM
    • 19,216 Posts
    • 20,338 Thanks
    cepheus
    I still think it was rather ingenuous of Martin to tweet this

    Martin Lewis ‚€Ź@MartinSLewis 25 Nov Politicians all rather hilariously pushing to claim credit for the payday loan cost cap. Who cares. Just glad it's happening
    However, in May of last year, MPs voted by 266 to 225 – a majority of 41 – to reject Labour MP Stella Creasy’s attempt to allow the authorities to cap the total cost of credit. The shocking truth is that only three Tories voted for the cap and no Lib dems.

    Whilst I'm no fan of new Labour, there are parties which will continue to support the power of the elite business interests, and those which are more likely to challenge them. By sticking up for the consumer you should be supporting the latter group. It's no good pretending it's an apolitical crusade it isn't.

    I think you should thank all the Labour MPs (not just Stella Creasy) who voted for the original bill and criticise the Tories for dragging their heels.
    Last edited by cepheus; 26-11-2013 at 9:09 AM.
    • Alpine Star
    • By Alpine Star 26th Nov 13, 10:37 AM
    • 1,259 Posts
    • 611 Thanks
    Alpine Star
    The OFT referred Pay Day Lenders to the competition commission because of issues with how some of them operated. They were not referred to the competition commission because due to concerns about lack of competition
    Originally posted by N1AK



    FYI the OFT's terms of reference to the Competition Commission were:

    ''The OFT has reasonable grounds for suspecting that a feature or a combination of features of the market or markets for the supply of payday loans in the UK prevents, restricts or distorts competition in this market.''

    http://www.competition-commission.org.uk/assets/competitioncommission/docs/2013/payday-lending/payday_lending_investigation_tor.pdf

    Is that clear enough for you?
    • Pincher
    • By Pincher 26th Nov 13, 12:41 PM
    • 6,516 Posts
    • 2,491 Thanks
    Pincher
    All of their money? Really? 100% goes on housing leaving nothing for anything else?
    Originally posted by gadgetmind


    If they have they wouldn't need to get a Pay Day Loan.
    You probably think people get these loans to buy Sony PS4s.

    I think you might be happier in China than in the UK.
    Originally posted by gadgetmind


    They actually have the political will to tackle over-population.
    They have now modified the one child per couple policy to one per person, which the BBC reported as a positive development.



    And the Daily Mail web site rather than MSE.
    Originally posted by gadgetmind


    I suspect you don't approve of overbreeding benefit louts either.

    If it's such a good idea, why not raise some funds and make it happen?
    Originally posted by gadgetmind


    http://www.theguardian.com/business/2013/apr/03/prudential-invests-generation-rent-100m-deal
    • gadgetmind
    • By gadgetmind 26th Nov 13, 12:49 PM
    • 10,921 Posts
    • 8,909 Thanks
    gadgetmind
    You probably think people get these loans to buy Sony PS4s.
    Originally posted by Pincher
    http://en.wikipedia.org/wiki/Strawman_argument

    They actually have the political will to tackle over-population.
    Yes, and care little for the rights of the individual.

    They have now modified the one child per couple policy to one per person
    No they haven't. A couple used to be able to have two children if both parents were from single child households. Now only one of them has to be from a single child household.

    I suspect you don't approve of overbreeding benefit louts either.
    Not a term I've ever used nor am I likely to use it.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
    • GazHatesBanks
    • By GazHatesBanks 26th Nov 13, 1:22 PM
    • 172 Posts
    • 173 Thanks
    GazHatesBanks
    Even during the worst of times I hadn't succumbed to these lenders, but the biggest problem with payday lenders is not the ridiculously high interest rates and charges - but the fact that they effectively set themselves up as preferential creditors (above even your rent/mortgage, food and council tax) by setting up a Continuous Payment Authority against your debit card.

    What the government should be banning is the Continuous Payment Authority for PDL companies (or at least limiting the number of allowed attempts) - maybe that would then focus the lenders minds on who they are prepared to lend to.

    At the moment they'll lend to anyone with a pulse because they know there will be available funds at some point that they can grab.

    Even the banks with their right of set off have to give notice that that's what they will do AND take into account all your regular commitments before they do so.

    Personally, I would like it to be mandatory that anyone who applies for these loans must be made to write out and submit a full budget before a loan can be granted just so they can see that they really can't afford to repay it (but of course it won't happen).
  • John1993
    Personally, I would like it to be mandatory that anyone who applies for these loans must be made to write out and submit a full budget before a loan can be granted just so they can see that they really can't afford to repay it (but of course it won't happen).
    Originally posted by GazHatesBanks
    If they did that, though, there'd be howls of protest (many of them on here) about how unfair it was that people were being denied credit. Just look at the threads already where people ask how to appeal the terrible decision of the banks not to lend to them to "help them out" of their parlous financial condition.

    I'd favour a different route, debtor's pprisons, and utter social stigma of failing to repay a debt. I think that this would quite quickly make people think twice about borrowing money unnecessarily.
    • FireWyrm
    • By FireWyrm 26th Nov 13, 2:42 PM
    • 6,422 Posts
    • 12,150 Thanks
    FireWyrm
    I susppect, if this was introduced, that you'd rapidly see banks simply refusing to allow any payments that resulted in an unauthorised overdraft, followed by accounts being closed.
    Originally posted by John1993
    The banks can and always have had the ability to refuse to honour a payment that would take you into 'unauthorised overdraft', they just CHOOSE not to. Lloyds for instance offer a basic account with no overdraft facility, but for an extra £10 a month (thieves) they can 'guarantee' that you wont ever go into unauthorised overdraft by rejecting any payment that would send you there. What I dont understand is why you can even go into 'unauthorised' overdraft on an account that doesnt even HAVE an overdraft arranged! This is the real iniquity and needs looking at closely in my opinion.

    Yes, PDLs charge interest, but if you borrow a small amount over a short period (1 to 30 days) you are looking at around the 25% mark which is damned sight more reasonable than 'unauthorised' overdraft fees.

    Everyone has jumped on the 'lets hang the PDLs' without stopping to think that a) APR = ANNUAL percentage rate, b) 25% isnt all that bad and c) like abortions, if you criminalise it, it goes underground. The demand doesnt disappear just because you make something illegal.

    The real problem is lack of money management skills and the government would do far better to make financial studies a compulsory and large part of the curriculum. Of course, it used to be, it was called 'home ec' but was removed on the basis that it was sexist and demeaning for girls to learn all about running a household, budgeting, mending and cooking.
    Debt Free! Long road, but we did it
    Meet my best friend : YNAB (you need a budget)
    My other best friend is a filofax.
    Do or do not, there is no try....Yoda.

    [/COLOR]
    • bigadaj
    • By bigadaj 26th Nov 13, 7:45 PM
    • 10,828 Posts
    • 7,162 Thanks
    bigadaj
    It's all very well asking for financial education, and it certainly won't do any harm, even though historically financial matters were probably learnt more through the family. The problem is that the pdl customers, and all those others who manage credit poorly, are predominantly the people who don't learn english, maths, physics etc so the actual impact would be minimal. Not saying it's not worth trying but would have to be combined with a large dose of personal responsibility which isn't a popular tipple.
    • JohnRo
    • By JohnRo 27th Nov 13, 12:21 PM
    • 2,770 Posts
    • 2,606 Thanks
    JohnRo
    I'd favour a different route, debtor's pprisons, and utter social stigma of failing to repay a debt. I think that this would quite quickly make people think twice about borrowing money unnecessarily.
    Originally posted by John1993
    Would this wonderful scheme of yours extend to politicians and insolvent bankers or is it just a rule for the lesser beings?
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
  • John1993
    Would this wonderful scheme of yours extend to politicians and insolvent bankers or is it just a rule for the lesser beings?
    Originally posted by JohnRo
    Wow, you think people are "greater" or "lesser" based on jobs?

    That's messed up.

    But yes, I think it'd be a good idea for everyone, why on earth would I think otherwise?

    Do you actually know any insolvent bankers, though? We don't tend to borrow, in my experience, as we know that job security is close to nonexistent. As I've pointed out on here before, you should not borrow if you aren't certain that you can pay it back.
    • JohnRo
    • By JohnRo 27th Nov 13, 2:52 PM
    • 2,770 Posts
    • 2,606 Thanks
    JohnRo
    Nice swerve, would this debtors prison extend to individuals who've exhibiting similar behaviour through a corporate entity then, as it does in the case of sole traders and would it not be prudent to link personal assets of those running a business and acquired through it to the business itself in the event of insolvency?
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
    • Sinhanada
    • By Sinhanada 27th Nov 13, 3:21 PM
    • 486 Posts
    • 293 Thanks
    Sinhanada
    One of my biggest concerns surrounding Pay Day Loan companies (Apart from the fact I am still digging myself out of that hole) is their conduct once you have defaulted.

    I understand that the T&C's clearly state the penalty charges, but with all of them I contacted only one behaved in what I would term money grabbing behaviour.

    When I initially contacted the companies and made token payments all of them stopped adding charges and interest and froze the account while Step Change took over for me with the exception of one bunch of old puppets. They continued to apply the daily charge for 30 days which resulted in my account going from an initial £500 loan to over £1500. They then sent this onto a debt collector.

    I believe that type of practice is what needs to change in addition to the cap on interest charges etc. There has to be a happy medium to this

    Sorry, rant over! To add I have less than 18 months to go - hopefully sooner
  • SeaLion
    Of course soon martin lewis will be tweeting on about how terrible it is that people have got nowhere to turn to borrow money and how awful it is that families are in hock to sharks..
    The 'crims' will be getting their thousands out from under the bed to lend out.
    When will the well meaning middle class learn that you can't legislate for stupidity, no matter what you do?
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

84Posts Today

1,658Users online

Martin's Twitter
  • RT @IsabelHardman: This is really good. For all the stuff about noisy rows over the past few days, it?s worth remembering that a lot of abu?

  • This is why I wrote the guide to financial abuse. It's tough to know when it's happening to you. It's also worth? https://t.co/XGI2sI7hOU

  • RT @David_Challen: Really happy @MartinSLewis is raising awareness of economic/financial abuse. My mother cleaned her cousins home for poc?

  • Follow Martin