Wednesday, 19 June 2013

Pawnbrokers and Payday Loans

"Lend me a tenner, I'll give you back £300":  Are the practises of the payday loan industry manipulating ordinary people?

To the average Bermondsey man or woman with a brain (and that is the majority of us living in SE1 and SE16), a proposition like this seems to be complete madness! We think ourselves too sensible to fall for betting scams on the South Bank or the 'charms' of Bermondsey beggars, some of whom can intimidate and threaten.  Many of us are even reluctant to lend a fiver to a work colleague or acquaintance! But, borrowing a hundred pounds from a payday lender at rates of up to 3000% APR interest seems to be an old trick that residents of the 'royal' borough are falling for, possibly  in their thousands, day after day. Although this is nothing new, the payday lending and pawnbroking industry could be using subtle manipulative practises to convince us to 'take a penny and part with 30'. 

Before the local payday lenders, many of whom operate under the guise of pawnbrokers, get too hot and bothered on this the hottest day of the year so far, let's look at the dictionary definition of the word 'manipulate':
 
1.  To handle, treat or use skilfully
 
2. To manage (a person, situation, etc.) to one's own advantage, esp. unfairly or unscrupulously.
 
Our proposition is that the people being 'managed' are the good folk of Bermondsey, especially those living in the most deprived areas.  But, shouldn't we all accept personal responsibility?
 



Our Superhero? 'Captain Pawn' on Southwark Park Road

 
Decades ago, families in Bermondsey and across London used the local pawnbroker to help them out when times were financially tight.  The service provided was, in effect, a loan, sometimes taken out using an item of clothing or furniture as collateral.  Of course, interest rates would have been higher than borrowing from a bank, but then as today the working man or woman on low wages has always lost out when it comes to loans.  As my great-grandmother experienced, pawning an item was generally done to raise money to feed the family or pay the rent, in the absence of state benefits.  Things are very different today.
 
The warmly and innocently named 'Money Shop' on Tower Bridge Road
(local wishes and those of councillors were recently overturned by allowing this 'shop' to open)
 As well including paying for essentials like electricity and food, people take out payday loans for a plethora of reasons including: covering emergency expenses; failing to obtain a bank or building society loan; reducing other debt; supplementing wages, overdrafts or student loans; paying for holidays, presents & entertainment; feeding alcohol and drug habits; children 'needing' extra spending money.  In a society with higher living standards than at any point in our history, something is going very wrong.
  

Albemarle Bond moved recently from The Blue to a more prominent location on Southwark Park Road

Planning committees and governments have been too slow to act on the problem, allowing knowingly the ballooning of the industry from £900million to £2.2 billion from 2008 - 2012 according to The Guardian.  This is another example of the 'middle-class-muck-about' in action: too much talk, not enough action and as a direct result, the suffering of the less well off.
'Albermarle Bond' has been sticking flyers under car windscreen wipers in SE16
 
Language and communication is at the heart of the problem.  The payday loan industry has rebranded themselves as kind, friendly, amusing, gentle and patriotic.  In advertising, they use warm yet cantankerous puppets of elderly people to persuade us to sign on the dotted line.  Party atmospheres are created outside their high street shops, with balloons and music.  Exorbitant interest rates are justified and the extent of their damage minimized in lenders' publicity.  The biggest provider, Wonga has recently sponsored television shows, London Transport and now even Newcastle United football club.  Payday UK even cites its 'great rates' as a reason to apply - unbelievable!  The industry is guilty of spinning on a scale that even Peter Mandleson couldn't have thought possible - and he was the master!  And yet, many lenders are open, upfront and honest about their rates and repayment schedules.  So, why do we still turn to them increasingly in our droves?  



Betty, Earl and Joyce: Wonga's front of house team
(Image Copyright the sun.co.uk)

 Three reasons: necessity, excess and greed.  While the first of these is understandable, those who are less well-off must be encouraged to use credit unions and their families to assist with saving and borrowing; in addition, the Citizens Advice Bureau at The Blue Market on Southwark Park Road provides excellent advice for those struggling on a budget.  The rest of us must learn and practise my great-grandmother's long-lost skills of saving, living within our means and going without what we cannot afford.  It's time for Bermondsey to shut down this con-trick loan shark industry - regulation and tinkering around the edges simply will not do.
 
 
Other articles
 
'Payday loans: The industry on numbers'
 
A student's experience:
 
Top 10 reasons to choose a 'PaydayUK' payday loan

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