LEAVE your morals at the door, was the mantra of the day for one new employee of a pay day loan company in our area.
After three days, the new recruit was out the door by choice, sickened by the unscrupulous exploitation of poor and vulnerable people.
Now the Bishop of Durham has joined the fray. Denouncing pay day loan deals, which can charge interest rates of more than 4,000 per cent, as “morally wrong” the Rt Rev Justin Welby has called for action.
While he stopped short of saying the firms themselves should be banned, he warned that rates of interest in the thousands of per cent were usury with: “It is a sin to charge that level of interest. It is just morally wrong and you can trace that back to Old Testament times.”
It’s a sin that so many are so desperate they feel there is no way out but to turn to loan sharks who will take their eyes out.
It’s a sin that unscrupulous companies will ensnare the most vulnerable into becoming dependent on their filthy lucre to survive as zombie debtors, only able to service the interest on their debts and not reduce them.
There are millions like this with a frightening one-in-six now condemned to being such a debtor. And how unwittingly they are sucked in by an advert on a bus, on the the TV, little realising that off the Richter scale interest rates – thousands of per cent – will entrap them and hold them hostage in a spiral of debt from which they can’t escape.
Some have taken the only way out they felt was left – their own life. That’s the ultimate price people are paying for their rollover debt which so quickly escalates.
One man, Steve, borrowed £80 which turned into a debt of £650 over the course of a month. Racking up such amounts is beyond belief on the amount borrowed. And all just to get by.
And Steve’s story is being repeated day in and day out. He took out several payday loans when he fell behind with his bills and personal debt: “Of course like a lot of people, I got myself into a little spiral where I couldn’t pay it and borrowed a bit more, and then I couldn’t pay that so I borrowed a bit more. I ended up with half a dozen of them.
“The vast majority have been very good in agreeing a way forward. However, there’s one that turned a debt of £80 into £650 over the course of a month with lots of threats and they’re very hard to get hold of. It’s ended up a bit of a nightmare scenario.”
A swift crackdown is long overdue and desperately needed as more desperate people find themselves trapped in debt. Numbers are mushrooming from 300,000 in 2006 to 1.9m in 2010.
It’s now one year since a government consultation on the dangers of unsustainable lending closed. And just weeks since a damning report by MPs, accused the government of dragging its heels on promised action to curb an explosion in the number of high-interest lenders, which are plunging households into a deadly debt spiral. Action is needed now. The Office of Fair Trading is currently looking at the issue, including carrying out inspections of about 60 major lenders and examining their adverts.
Their report will be published later this year.
Regulators have to be given more power over how much these payday loan companies are allowed to charge. Until then the trading on the financial miseries of debt-ridden households goes on, all out of control. And a sin before God as the Bishop knows is so wilfully being committed.