NANNY KNOWS BEST
people bought a car with their pension funds, while 14 per cent paid for a holiday. It remains to be seen if Osborne’s decision will cause further debt problems for the middle classes. Concerns are also mounting that the UK’s
economic recovery is being fuelled by borrow- ing, rather than genuine wealth generation. The average family debt has risen to £54,000, up from £29,000 a decade ago, according to the Centre for Social Justice think tank. That’s not just worrying for the people who have borrowed the cash but also the rest of society – when homes are repossessed and families are left destitute, it’s the taxpayer who picks up the bill through the welfare state. Now’s the time to grasp the nettle. Adverts
should be banned before the watershed to stop young children from thinking that gambling is a normal part of life, rather than something that should be kept for an occasional fl utter at the racecourse or a bet on cup fi nal day. The tide appears to be turning – a recent poll
by YouGov found that 70 per cent of the public would support an outright ban on advertising by payday lenders. Some football clubs are already taking a
stand – while Hearts and Newcastle may still be sponsored by Wonga, both Bolton and Shef- fi eld Wednesday have turned down deals with payday lenders. In the Highland League, Nairn County has placed adverts in its match-day programmes to warn fans of the dangers of getting into debt. And Citizens Advice Scotland has even launched a campaign to have payday lender sponsorship banned from this summer’s Commonwealth Games in Glasgow.
Yet advertising is just part of the problem.
Now is also the time to crack down on the lending itself. The Financial Conduct Author- ity (FCA), the new City watchdog, took over as the regulator for payday loan fi rms on 1 April. Here’s an opportunity to get serious about controlling the levels of interest that these companies can charge their customers. FCA chief executive Martin Wheatley has
already said a quarter of payday lenders could go out of business after his agency begins review- ing the market. And the coalition government at Westminster has pledged to introduce a cap on the amount of interest next year. Critics argue that a cap will reduce access to
borrowing for the poorest members of society. But these are the very people who need to be protected from taking on excessive debt. In France, the maximum APR for a loan is
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around 21 per cent, while in Germany the cap is set at about 16 per cent. While some argue these caps have pushed borrowers towards loan sharks and other unregulated lenders, it would appear the French and German econo- mies haven’t been brought to their knees by the introduction of lending limits. Part of tackling these problems is to provide
alternatives, and so it’s heartening to see the growth of credit unions. Forget the old-fash- ioned ‘Building & Loan’ run by James Stewart’s character in It’s A Wonderful Life – these are modern outfi ts promoted by bodies such as the NHS and Strathclyde Passenger Transport. Now is the time for strong leadership on
payday loans and betting to show that some- times nanny does know best.
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DEBT
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