To read the headline articles in several of the nation’s papers today you would be forgiven for wondering which one, if any at all, was the real hero in standing up to the short term loans villains.
The Mail, Mirror, Independent and the Guardian, are just a few who are crowing over the OFT’s rather tardy entrance on to the scene of the “instant cash loan battleground”.
Each seems to be claiming some sort of credit for spearheading a campaign against the worst of the companies who have been steadily creeping onto the instant cash loans market over the last few years.
To be fair to the more honest of the companies who lend relatively small amounts of cash, readily and willingly to those in need, the Office of Fair Trading is only targeting the very worst offenders.
There seems to be a bit of confusion about terms used by some of the tabloids in the debate over the rogues of the industry. For instance, the term “loan shark” is used rather indiscriminately, but really refers to those unlicensed lenders who seem to thrive around the poorest of council estates and loan money to the unemployed, and those on some sort of benefit at ridiculous rates of interest, often with sometimes thinly veiled threats issued when somebody fails to pay up.
The high street short term loans companies, like Wonga and Payday Express, are legitimate businesses with official websites and glossy TV adverts. These companies are quite varied in their terms and conditions. They all lend money more readily than the standard lenders like banks and credit card providers, and the interest rates are generally much higher, but the loans are supposed to be only for a week or two until the borrower gets their next pay cheque.
While the OFT has finally decided to investigate the top 50 short term loans companies, other critics say that too little has been done too late.
One very vocal critic has been MP Stella Creasy, who compares the instant cash lenders to “Japanese knotweed”. She says that as soon as one company gets “sorted out”, another pops up in its place. She calls the companies “legal loan sharks” and says that the law must be changed to really limit the worst of their activities and prevent the deluge of people getting into ever more serious debt, as is happening at the moment.
The last word goes to the tabloid campaigners: their term for those poor unfortunates who never ever get out of debt is the “debt zombies”.