So the War on Wonga rages on – with churches, credit unions, press representatives and the general public alike taking an aggressive stand against the online payday loans industry – and things are looking grim for irresponsible lenders in the space.
The Financial Conduct Authority’s (FCA) now infamous upheaval of the loans industry has, to some extent, served its purpose – with up to half of the UK’s major lenders leaving the game in the face of regulations that render them in violation. So as lenders clear the water, it’s time to consider how financially vulnerable people will fare against the loan sharks set to take their place – and see precisely where we’re at with the War on Wonga.
The Battle of Broadcasting
This month, the FCA has found 20% of all loan and credit companies’ ads in violation of advertising rules – and we can hear that now familiar sound of the morality whip cracking against the backs of lenders nationwide. As ever, an inattention to honesty and clarity is what’s up, with a fifth of the country’s loan providers broadcasting adverts which are considered neither honest nor clear.
Naturally, issues of industry APR rates have entered the conversation – with the FCA denouncing lenders on the basis that their ads fail to clearly disclose their interest rates to audiences. The assumption is that these big, scary percentages, if revealed to prospective customers, would serve to deter them from ever applying for a loan.
Other lenders added to the naughty list included those suggesting that their loans help to repair your poor credit rating and even that they could enable you to clear your existing debt. Anyone wise to the very fundamentals of payday lending is, of course, aware that neither of these are real-life benefits of borrowing.
As ever, the industry also continues to come under scrutiny for allegedly targeting young audiences through the use of endearing animal mascots and such like. It’s hard to say whether this is a legitimate criticism, or merely a desperate attempt on the part of lenders to brighten up the public’s now thoroughly tainted perceptions.
So by now you’ll have heard the gossip that Wonga and the Church of England aren’t exactly on speaking terms. True, the CofE may still have that £80k stake in the company, but this has been one messy breakup. It was Archbishop of Canterbury Justin Welby who first declared war on Wonga, instead suggesting that the Church teach future generations the evils of payday lending.
The latest update is that the Church of England has launched its own scheme designed to promote responsible lending, presenting credit unions as a favourable alternative to unholy payday lenders. Church members will be trained to provide sound financial advice where needed, in the hope that born-again borrowers can enter a state of righteous financial stability.
As Adrian Newman, Bishop of Stepney, put it when he spoke to the BBC, “you can either whinge about the Wongas of this world, or you can provide an attractive alternative.” And don’t worry, we’ve been explicitly assured that no money will change hands in church.
What’s hardest to swallow in the midst of the War on Wonga, particularly as a payday loan broker, is the misconception that borrowing from us is, by nature, irresponsible borrowing. The propaganda continually regurgitated by members of the church and the press states definitively, that payday lending is destructive and manipulative, with companies in this space taking advantage of people without the means to look elsewhere for help.
The recent flood of payday lenders leaving the industry under new FCA regulations demonstrates that those sticking it out are operating within the ‘responsible lending’ framework and have nothing to apologise for. With so many people continuing to make the most of these short term loans during the countdown to payday, it might be worth crediting our customers with the intelligence to know what they’re doing.
The bottom line is this: whatever religious, financial or media bodies believe payday loan companies to be guilty of, the threats posed by loan sharks are far greater. And with struggling people desperate for a financial lifeline, surely it’s better for companies like Instant Lolly to offer them a hand than for society to throw them to the sharks?