From Gel Pen Dealers To Payday Lenders

As a nine year old, I prided myself on my collection of scented gel pens, or ‘smellies’ as they were known.

They were all the rage and I’d built up quite a large collection thanks to what I thought was my business acumen (or capitalist tendencies – call it what you will).

At playtime everyone would trade their ‘smellies’ and I soon began to realise that some of the kids weren’t great at judging which gel pens were, quite literally, the flavour of the week.

I capitalised on what felt like a major epiphany and started trading with the kids I could get the best deal with – I had yet to realise that both partners should benefit from a good business deal and had not yet developed my own notion of CSR (I don’t feel too guilty though, many conglomerates still haven’t and they don’t have the veil of childhood ignorance to blame).

After a while, like with all shady schemes, authority caught up. The trading became a bit much and (not down to me, I hasten to add – I kept my ‘dealing’ below the authority’s radar), the school stepped in to ban the gel pens. They were causing too much grief and disruption; kids were accepting deals then backtracking and wanting exchanges.

I like to think I developed a conscience and a notion of right and wrong soon after, and that I would have stopped of my own accord anyway, but the school couldn’t rely on that.

Similarly, the events of the last couple of months have led many to argue that the government cannot rely on the conscience of so-called payday lenders to do the right thing.

There firms are known to charge up to 5,000% interest and have been the subject of vitriolic attacks from both the Church and the state. Stella Creasy, the MP for Walthamstow – where 7.2% of the population are registered as jobseekers, far exceeding the national average of 3.8% – has been particularly vocal on the issue.

Often, the recipients of the loans find their debts spiralling out of control and are at the mercy of firms run by people like my nine year old self who have, arguably, failed to develop a reasonable notion of social responsibility.

The government are under increasing pressure to regulate these firms, or at the very least ban excessively high APR. Perhaps they cannot rely on every generation’s smelly gel pen dealers to develop a conscience.

Pay day lenders have sought to defend their industry claiming they provide essential financial assistance to those who need it, at short notice, and without the bureaucracy associated with getting a loan from a high street bank.

The most recent twist in the tale has been the revelation that the Church of England, led by Archbishop of Canterbury Justin Welby – one of the most vocal critics of pay day lenders – has indirectly invested in Wonga.

While the figure makes up only £75,000 of the Church’s £5.2billion portfolio, it does seem to have undermined Welby’s critique.

A study by the Money Advice Trust, a charity that advises people with debt problems, has found a 4,000% increase in the number of complaints about payday lenders since 2007. As the pressure continues to mount upon the consumer credit sector it’ll be interesting to see if, and how the government acts. The issue will no doubt hit the headlines again this Autumn, when The Financial Conduct Authority is due to publish a paper on the rules it plans to impose when it takes responsibility for regulation of the £2 billion sector in April 2014.

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