[I wrote this blog for my client, the Community Development Finance Association, to appear on the BusinessZone website.]
A recent feature in Management Today, “Cashing in on the Poor,” asked whether businesses are transgressing a code of ethics by exploiting the financially vulnerable. Payday loan companies, cheque cashing businesses and pawnbrokers are all thriving businesses in the current economy.
It’s easy for some commentators to blame the users of high cost credit for finding themselves in growing spirals of debt. But 15% of the UK’s population are now excluded from mainstream bank lending; household incomes are falling and growing numbers of people are living beneath the poverty line.
Many people are turning to modern day legal loan sharks simply to pay for household essentials such as food and travel. New figures show that 1 in 4 18-24 year olds are likely to use a payday loan in the next six months.
Campaigners including the Community Development Finance Association, which represents affordable, ethical lenders to businesses and households, have been calling for Government action to regulate the burgeoning payday and high interest loan industry.
A proposed amendment to the Financial Services Bill which would potentially give the new Financial Conduct Authority (FCA) the power to cap high interest loan charges will be debated in the House of Lords on 28 November.
I’d like to invite readers to spare just a moment to email their support for this amendment.
More information here and a sample email to send can be found here.
Businesses that make their customers poorer and poorer may be making short term profits but they make the country poorer too – and stifle our economic recovery.
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