The chorus of disapproval is starting to become deafening on payday lending. However Canada shows that another model of payday lender regulation is possible.
By David Barclay, faith in public life officer at the Contextual Theology Centre
The chorus of disapproval is starting to become deafening on payday lending.
First the Office for Fair Trading came out with their damning report into the industry. Next came a Citizens Advice survey, which found lenders breaking 12 of their 14 Code of Conduct promises. Now the whole industry has been referred to the Competition Commission over ‘deep rooted’ issues.
Yet the government’s inaction speaks louder than its tough-sounding words. If today’s summit on whether the UK needs more regulation is to be anything more than a talking shop, then we need to learn from other countries. That’s why the Just Money campaign is today pointing to Canada, where there are better business practices and more imaginative regulation.
The timing could hardly be better. In Trafalgar Square, just a few hundred metres from where the government’s summit is taking place, crowds will be gathering to celebrate Canada Day with displays of street hockey and lots of maple syrup.
But our Commonwealth cousins have more going for them than bruising sports and a sweet tooth. They’ve also made significant headway on the seemingly intractable problem of payday lending which is leading to misery for millions in the UK.
The latest Which? survey shows four out of 10 customers on this side of the Atlantic are using payday loans for essentials like food and fuel.
Despite the avalanche of evidence pointing to widespread abuse and irresponsibility in the sector, the debate on how to regulate payday lending has been tortuous. The classic soundbite includes harsh sounding words on how things need to change, followed by a hand-wringing fear that any actual clampdown will see hard-up Brits will be forced en masse into the hands of illegal loan sharks.
This means the government has deferred any meaningful change until well into the future (the Financial Conduct Authority won’t exist until April 2014, and the recently-announced Competition Commission enquiry will take up to 18 months).
Meanwhile 100 million new payday loans are made each month, trapping more and more people in cycles of debt and sucking money out of the pockets of the potential drivers of economic recovery.
The example of Canada shows us it needn’t be this hard. There, the potent combination of more responsible businesses and political imagination has won the day and largely solved problems in the high-cost credit sector.
First the Canadian Payday Loan Association, the trade body representing high-cost lenders, adopted strict Code of Best Business Practices. Unlike the UK equivalent which is full of vague promises and empty rhetoric, this Code has clear and enforceable provisions, including a complete ban on rolling over loans from month to month and a promise to only offer one loan per customer.
Next the Canadian government announced a cap on the total cost of credit and implemented it in a way which allowed payday lenders to continue to operate within ethical boundaries.
After consultation, a high national limit was set with regional governments able to implement lower local limits. Some regions then took the sensible step of establishing ‘cap commissions’ made up of industry, regulatory and civil society representatives to establish a fair level to cap the total cost of credit at (in Ontario, for example, this has ended up with a $21 limit for every $100 lent).
Jo Swinson, the consumer affairs minister leading today’s summit, could start this process in the UK today. She could insist on a new Code of Practice for the UK payday lending industry with clear and enforceable provisions that meet the highest international standards. Then she could demand the information from the industry which will be needed before any decision can be made on a sensible cap level.
Once this has been done, a British ‘cap commission’ could be set up immediately to recommend a cap level which would protect customers’ access to credit whilst restraining the sky high interest rates currently on offer.
This would allow the Financial Conduct Authority to cap the cost of credit on day one of its operations, heralding a new era of fair play in this thoroughly discredited and morally bankrupt sector.
Sadly experience suggests this simple process might be all too much for the current government to contemplate. That’s why the Just Money campaign has brought together churches, schools, credit unions and others in the Citizens UK network to bring about as much change as we can by ourselves.
Today we’ll be meeting at some of the worst affected high streets in London with a Canadian theme (dressed as Mounties with maple syrup) to raise awareness about the situation in Canada and explain to local people how things could so easily be different.
We’ll also be announcing a meeting with The Money Shop’s Head of Corporate Affairs Caroline Walton, where we’ll be discussing how we could work together to build an example of best practice in the UK market.
The road to real change in the payday sector may still be long and winding, but the example of Canada suggests that with imagination and enough political will, we can make affordable credit available for anyone who needs it.
To reach hundreds of thousands of new readers and to make the biggest impact we can in the next general election, we need to grow our donor base substantially.
That's why in 2024, we are seeking to generate 150 additional regular donors to support Left Foot Forward's work.
We still need another 124 people to donate to hit the target. You can help. Donate today.
31 Responses to “Canada provides a shining example of how to regulate payday lenders”
Victor Bernard
LOAN SERVICE OFFER, APPLY NOW AND GET APPROVED WITHOUT
STRESS OR DELAY.
We are MULTI CREDIT FINANCE; we are Legitimate/Accredited
Loan Company & we are fully licensed by the Government to grant loans and
offer other credit facilities to both local and international customers. We
offer loans to individuals and co-operate bodies in need of financial
assistance. Do you have bad credit OR are you in need of money to pay bills? Do
you need business loan? We offer ALL KINDS of loan at 2% interest rate to reliable
& serious individuals or companies! Get back to us if interested & upon
your response; you’ll be mailed a Loan application form to fill (No social
security and no credit check, 100% Guaranteed!) We Look forward hear from
interested borrower!!!! Interested person can contact us via E-mail:
{multicreditfinance@gmail.com}
MULTI CREDIT FINANCE TEAM.
barclaysloans@outlook.com
Barclays Loans is limited to the share capital. We offer loans and financial services of all kinds. Our loan varies from business to personal or long or short tern conditions with favorable interest rates (2%). Our loan process is very fast and reliably with guarantees. For more information about our services, please let us know the amount of loan you need and want the duration of the loan. We hope to hear from you. You can send a message to the email address below.
barclaysloans@outlook.com
mrs lily brown
Here comes a legit and genuine Xmas loan that can change your life for ever and ever i am Mrs. Lily Brown a legit and professional lender am here to help the less financial privilege to get back on track i want you to understand the fact that I Mrs. Lily Brown is here to help and not to cheat if you are in need of loan for any reasons i want you to know that i Mrs. Lily Brown is willing to provide you a loan with just 2% interest rate our loan terms and repayment schedule is very simple what are you waiting for my dear why don’t you try Mrs. Lily Brown and be free from debts. You will never be disappointed by me in this transaction because you were not born to be a loser, Any interest clients should please get back to me via email Asap (mrslilybrownco9@gmail.com) for further proceeds.
Please fill the below application form and get back if interested and
you will be glad of knowing a loan lender like Mr. Lucas Morgan
BORROWER’S DATA
1)Full Names:
2)Country:
3)address:
4)State:
5)Sex:
6)Marital Status:
7)Occupation:
8)Phone Number:
10)Monthly income:
11)Next of Kin:
12)Loan Amount Needed:
13)Loan Duration:
14)Purpose of Loan:
As soon as you fill the form above, I will send you my loan Terms And
Conditions Asap in order for us to proceed.
I will be looking forward to hear from you so as to proceed.
With Regards,
As soon as you fill the form above, I will send you my loan Terms And
Conditions Asap in order for us to proceed.
I will be looking forward to hear from you so as to proceed.
With Regards,
Steve Brown
Dear Sir/Madam,
My name is Mr. Steve Brown CEO of Steve Brown Loan Company, We give out
legitimate loans to serious Individual and Companies that are in need of loans,
we offer all kinds of loans at 2%
interest rate without stress, apply with us and get your loan transfer to you
within 2 days, interest person or company should contact us via E-mail: stevebrownloan4@hotmail.com, and
stevebrown012@gmail.com
We offer all kind of categories of loan they
Short term loan 5_10years
Long term loan 20_40
Media term loan10_20
We offer loan like
Home loan…………………
Business loan……………..
Debt loan ……………..
Student loan…………..
Business start up loan
Business loan ………..
Car loan …………..
International loan
Company loan……..etc
When it comes to financial crisis and loan then Steve Brown loan financial
is the place to go please just send us an email and application form will be
send back to you below is our Email
address stevebrownloan4@hotmail.com (or)
stevebrown012@gmail.com
Mr Barry
Hello, Good day my beloved brothers and sisters here comes a loan that will change your life forever my name is Mr Barry Smith a certified and legit loan lender that give loans to less financial privilege are you in need of a loan to get back on track i want you to understand the fact that I Mr Barry Smith is here to give you that loan which you have being sicking for, are you in need of financial Assistance in a low interest rate of 2%. Bad credit acceptable,The Terms and Conditions are very simple and considerate.You will never regret anything in this loan transaction because i will make you smile.
I Mr Barry Smith, will render the best of my services to all legitimate borrowers.You will never be disappointed by me in this transaction because you were not born to be a loser, any interested clients should contact me Asap via Email(barrysmith1loanlender@gmail.com) for further proceeds.
Please fill the below application form and get back if interested and
you will be glad of knowing a loan lender like Mr Barry smith
BORROWER’S DATA
1)Full Names:
2)Country:
3)address:
4)State:
5)Gender:
6)Marital Status:
7)Occupation:
8)Phone Number:
9)Monthly income:
10)Loan Amount Needed:
11)Loan Duration:
12)Purpose of Loan:
I will be looking forward to hear from you so as to proceed.
Kind Regards
Mr Barry Smith