2356percent

Let's STOP 'payday' loans with typical APRs like 2,356%

2356percent features in The Independent's OFT coverage

We're delighted that, yesterday, The Independent chose to include the 2356percent campaign in its Money section's coverage of the outcome of the Office of Fair Trading review.  

The article offers a balanced analysis of the pros and cons of short-term high-interest lending and is well worth a read.

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OFT review 'amounts to a green light to 2500%+ loans'

The Office of Fair Trading has published its review of the high-cost short-term lending market in the UK and concluded that - while consumers do not benefit from sufficient competition between lenders - the market works 'reasonably well'.

However, in its statement announcing its findings, the OFT acknowledged the need for Government to consider action in order to safeguard consumer interests.

Announcing the findings of its review, OFT Director of the Credit Group Ray Watson said: "Our report has found that people who use high-cost credit have limited options and find it difficult to exercise what choice they have to obtain the best deal. This means that competition between suppliers is less effective than it might be.

"The recommendations we're making today would deliver worthwhile improvements to these markets but more radical approaches, outside the remit of the OFT, need to be examined by the Government if the fundamental and longstanding issues of lack of consumer power and limited supply are to be tackled.'

You can see the OFT's statement and links to the full published review at its website.

 The 2356percent campaign welcomes the OFT's review. We recognise that the OFT is powerless to intervene in a marketplace where there is insufficient competition, despite acknowledging that greater competition between lenders is likely to be to the benefit of consumers. We also welcome the OFT's acknowledgement of the need for Government scrutiny of the payday lending sector. 

But the OFT's conclusions clearly demonstrate that an absence of consumer choice exists because lenders choose not to behave competitively. In effect, its review amounts to a green light to high-cost short-term lenders to carry on lending at 2,500% or more.

In the absence of sufficient competition, the need for regulatory intervention to ensure that borrowers of short-term loans are afforded the same protection as investors in savings and investment products, is apparent. 

We renew our call for the Government to take steps to bring payday lending under the ambit of a regulatory body that is able to intervene in the conduct of businesses offering short-term loan products in the UK. The Government must transfer regulatory responsibility from the OFT to the Financial Services Authority (FSA) and its successor consumer protection body.

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Now the Parliamentary dust has settled

Following the hiatus of a General Election, now seemed like a good time to say thank you to all the supporters of the 2356percent campaign who have been in touch in recent weeks asking what's next for our call for fair short-term lending in the UK.

Over the course of the last few months our campaign has gathered the support of more than 440 members at our Facebook group and 31 MPs supported Greg Mulholland's Early Day Motion calling for fair payday loans.

In addition, we have been invited to meet with the founder and CEO of Wonga.com, Errol Damelin, to discuss the issues of payday loans and fair short-term credit in the UK. Details of the meeting with Wonga will be published here first. Wonga are waiting for me to confirm a convenient time to meet and I intend to do so this week.

Parliamentary support remains an important focus for the campaign. The re-election of supporters like Liberal Democrats Greg Mulholland MP and Jo Swinson MP, and the election of the UK's first Green Party MP, Caroline Lucas, and Labour's Stephen Twigg MP could prove vital.
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Where do the political parties stand on high-cost consumer credit?

With the polls suggesting one of the tightest election races in living memory, perhaps the leading parties' stance on the issue of high-cost consumer credit may influence your decision today?

If it might, then The Urban Forum's assessment of the Conservative, Labour and Liberal Democrat manifestos against its '10 Big Ideas' - of which increasing access to credit on fair terms is one - is well worth a read at its Election Watch site.

The Green Party has outlined its policies for reform of the banking system in its manifesto and at its website, and these include reference to the provision of access to fair credit via community banks, credit unions and mutuals.

In Wales, Plaid Cymru's Westminster manifesto also calls for reform of the banking system to safeguard against the risk of 'active encouragement of high levels of personal debt'. The Scottish National Party does not appear to make specific reference to access to fair credit but you can take a look at the SNP's Westminster manifesto here.

No matter what the outcome of the general election, the 2356percent Facebook campaign will continue to press for reform that delivers fair loans to consumers once Parliament resumes.

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2356percent campaign welcomes Wonga.com's invitation to meet over 'payday' loans

Representatives of the 2356percent campaign and Wonga.com plan to meet to discuss the issues surrounding short-term 'payday' loans, following an invitation from the lender yesterday.

Campaign organiser, Ian Thomas, has welcomed Wonga's move. He said: "This is a welcome opportunity to understand more about Wonga's business and how this influences the offering of short-term loans which our campaign considers to be expensive and unfair to consumers. At the same time, it provides us with an opportunity to explain how our campaign came about and what its long-term ambitions are."

He added: "I expect the conversation to be constructive and worthwhile for both sides of this debate. Wonga is under no obligation to meet with the campaign and the fact that it is willing to do so is very positive. It suggests that it is a business that is willing to listen as well as take the time to explain why it considers itself to be a responsible lender."

More than 350 supporters have joined the campaign group at Facebook since it launched on 17 February 2010.
 
Since February, the campaign has attracted the support of Green Party leader and MEP Caroline Lucas, Liberal Democrat Jo Swinson MP, former Government Minister Stephen Twigg and North Lincolnshire Liberal Democrat Councillors Les Bonner and Steve Beasant.
 
Two weeks ago, Liberal Democrat MP for Leeds North West, Greg Mulholland, tabled an Early Day Motion (EDM) in the House of Commons urging MPs to back the campaign. The EDM had secured the support of 31 MPs before the dissolution of Parliament last week.

Green Party leader Caroline Lucas backs 'inspiring' 2356percent campaign

 

Green Party leader and MEP Caroline Lucas has delivered a boost to the 2356percent campaign for fair payday loan APRs by joining its Facebook Group.

Caroline said: 'This is an inspiring campaign for fair loan rates. Not only does it help highlight an issue about the alarming typical APRs being offered to vulnerable consumers, but it also indicates the need for the Government and regulatory authorities to ensure that all consumers in the UK are able to get a fair deal from financial services providers.'
 
'High-street banks and lenders have retreated from the so-called 'sub-prime' market in the wake of the liquidity crisis; the result is the appearance of new types of high-cost loan products for people who are the least able to afford them, but are left with no real choice and nowhere else to turn.'
 
Caroline, who is The Green Party's candidate in the Brighton Pavilion constituency at the forthcoming General Election, says her party has pledged to fight for a fair deal with community banks, credit unions and mutuals providing realistic loans to families and small and local businesses.

Caroline is among more than 320 supporters who have joined the campaign since its Facebook Group was launched on 17 February 2010.
 
Over the past seven weeks, the campaign has attracted the support of Jo Swinson MP, former Government Minister Stephen Twigg and North Lincolnshire Liberal Democrat Councillor Les Bonner.
 
Last week, Liberal Democrat MP for Leeds North West, Greg Mulholland, tabled an Early Day Motion (EDM) in the House of Commons urging MPs to back the campaign. The EDM now has the support of 25 MPs in Westminster.

Step-by-step MP letter-writing campaign support published

The 2356percent campaign has published online step-by-step help for its supporters that explains how to write to their Member of Parliament and invite them to sign the Early Day Motion (EDM) tabled by Greg Mulholland MP on 29 March 2010.

The campaign is inviting Facebook Group members, Twitter followers and other supporters to write to their MP - via writetothem.com - to encourage more MPs to support the EDM which calls on on the Government and regulatory authorities to ensure borrowers are treated fairly by payday lenders.

Help for supporters has been published at 2356percent's Slideshare page and includes a brief presentation called 'How to write to your MP using writetothem.com' (above) and an example of text that supporters may choose to include in their correspondence with constituency MPs (below).

More than 300 members have now joined the campaign's Facebook Group which was launched on 17 February 2010.

Greg Mulholland MP urges Commons to back 2356percent campaign call

Liberal Democrat MP for Leeds North West, Greg Mulholland MP, has tabled an Early Day Motion (EDM) in the House of Commons calling on the Government and regulators to support the 2356percent Facebook campaign and take action to ensure fair payday loan rates for borrowers.

Greg said: “These companies are tricking people into thinking that they offer a convenient solution to bridging the gap before pay day, when in reality they are charging extortionate rates.

“I think the public need to be made aware that such extremely expensive credit represents the migration of loan shark style lending from the doorstep to the internet browser."

The EDM, which was tabled on 29 March 2010, states: "That this House notes that, despite irresponsible sub-prime lending and inappropriate borrowing precipitating the liquidity crisis and subsequent recession, sub-prime lenders are currently advertising money within the hour that is described as fast and flexible, with excessive typical annual percentage rates of 2,356 per cent. in the case of QuickQuid and 2,689 per cent. in the case of Wonga; believes that television advertising of such extremely expensive credit represents the migration of loan-shark style lending from the doorstep to the computer desktop; further believes that lending of this kind can prove both socially and financially irresponsible and that the Government and appropriate regulatory authorities should insist on the application of the regulatory principle of fair treatment of consumers which currently applies to savings and investments in the UK to sub-prime lending products to protect vulnerable consumers; and further believes that in the interim the Government should cap interest rates on sub-prime personal lending products and encourage the conditions for and promote the benefits of the establishment of social enterprises, such as credit unions, to create an alternative for consumers in need to turn to."

The tabling of the EDM marks the start of a new lobbying stage in the 2356percent according to campaign organiser, Ian Thomas.

He said: "We are delighted that Greg has taken the time to draw attention to the issue of excessive annual percentage rates (APRs) that are being charged by 'payday' lenders in the UK by tabling the Early Day Motion in the House of Commons.

"As a nation we are continuing to pay the price for irresponsible lending practices that encourage inappropriate sub-prime borrowing. No matter what their claims, businesses like Wonga.com, Quickquid and Skint.com should not be able to lend even the smallest amount of money at such high costs to consumers. Borrowers should be afforded the kind of regulatory safeguards that savers and investors enjoy, and that means product terms should be fair to consumers.

"The 2356percent campaign is just six weeks old but is growing all the time. The more people take part in the campaign through our Facebook Group the more chance we will be able to shape the future of 'payday' lending in the UK."

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Leading Lib Dem MP becomes first Parliamentary supporter of 2356percent's fair payday loan campaign

Liberal Democrat Shadow Foreign Affairs Minister, Jo Swinson MP, has become the first Member of Parliament to back the 2356percent Facebook campaign calling for fair payday loan APRs.

The East Dunbartonshire MP (pictured above) has joined more than 220 members of the campaign's Facebook group - launched just one month ago - who are concerned about the typical APRs being offered by short-term 'payday' lenders like Quickquid.co.uk (2,356%) and Wonga.com (2,689%).

Jo said: "Despite all the lessons that we should have learned from the liquidity crisis, it's alarming that potentially irresponsible lending and inappropriate borrowing continues to thrive. It is not simply an issue of the high cost of the loans in terms of money, but the high social and emotional costs upon relationships, families, homes and communities of either failing to manage any resulting debt or being drawn into a cycle of habitual borrowing.

"I understand that the Office of Fair Trading is expected to report on its review of the short-term sub-prime lending market soon. I wish the 2356percent campaign every success in seeking to influence the debate over the fairness of existing short-term lending practices and the need to create new ways for people on low incomes to borrow at a much lower cost and at less risk to their financial well-being."

Campaign organiser, Ian Thomas, said: "I'm sure every member of our campaign will be as delighted as I am that Jo has chosen to join the Facebook group. It's a huge boost to have the backing of such a significant public figure.

"It is support from people like Jo that is sustaining the momentum which we have begun to build thanks to the Facebook Group. It's a great way to enable lots of people - each individually alarmed by the cost of payday loans - to gather together and play their part in influencing the future shape of short-term lending in the UK."

To join in the Campaign simply follow the link and click 'Join Group' here: 2356percent at Facebook

Former Labour Government Minister backs 2356percent Facebook campaign

Former Minister of State for School Standards, Stephen Twigg, has backed the 2356percent Facebook campaign for fairer payday loan APRs.

Stephen, who is Labour's parliamentary candidate for Liverpool West Derby at this year's General Election, has joined members of the campaign group at the social networking site in order to lend his support to the campaign for fairer lending rates to cash-strapped consumers.

The two-week old campaign now has the support of more than 170 members at its Facebook Group