Harringay, Haringey - So Good they Spelt it Twice!

Oh the shark has pretty teeth dear

Many of you (without those no junk mail stickers) may have got up this morning and sleepily cleared away the assorted pizza/clairvoyant mystic/handyman leaflets that enterprising and early rising deliverers thrust through our doors, chucking them into the recycling bin with barely a glance.

So you may have missed this leaflet below from a bona fide loan shark with its jaunty cartoon and its tempting offers of small sums of money.

So what? Just chuck it away. Anyone with half a brain knows that you should steer well clear, right? Or maybe it's nobody's business if someone needs a bit extra.

So why does this leaflet trouble me?

We know that money can be had any time by popping along to a high street money store. Phoning a number on daytime TV or going online can mean money in a bank account within minutes. Pawnbrokers and payday lenders are mushrooming on high streets. This isn't much different, is it?

They offer small sums. These sums seem manageable. Even if you are too sick or disabled to go out, maybe elderly, or quite simply too ashamed to be seen going into a money shop, this might seem like an attractive proposition. It's even got a freephone number. People come to you to collect. You have to give them permission in writing

They are members of the consumer credit association which has a lovely swanky website.

They might *not* indulge in the practices reported elsewhere of these 'home loan' companies who encourage people to borrow more to cover arrears, who immediately offer larger sums to people who ask for small ones, or hassle you to borrow again if you manage to pay them off.

Okay, now look at the other side (sorry, I ripped it up before having a think about this).

What is missing?

Yep... no mention of APR any where.

Considering that a lender has recently had an ad pulled by the ASA for failing to display clearly their APR, surely a complete failure to mention it all is worse?

Emine Ibrahim picked up my tweet on this and helpfully phoned the company to enquire about APR. Eventually, someone was able to tell her it was 1559% (yes you read that right). She also discovered that an agent will call weekly (shades of hiding from the tally man?)

So, was I right to feel that this ad was troublesome? Citizen's Advice who were running a #paydaywatch discussion certainly thought so when I asked them and I have taken their advice to report this via their simple form which helps them to collect data on payday loan sharking before they forward it to the ASA.

If anyone wants to help highlight irresponsible advertising by payday loan companies, or needs advice over a payday loan, you can find out more here

Tags for Forum Posts: leaflets, loan sharks, pay day loans

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Permalink Reply by Alan Stanton on December 6, 2013 at 11:36

Many years ago my late father had a large bank loan which he gradually paid off. His bank used to send him a bottle of Scotch at Christmas. One year it didn't come and he asked why. Wasn't he still a valued customer?

"Yes," said the manager. "But you don't owe us money any more."

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Permalink Reply by John McMullan on December 6, 2013 at 11:48

In David Graeber's book "Debt: The first 5000 years" he talks about life in Britain before coinage was widespread. Everybody just loaned one another "money" and kept a record. Every year they would get together in the village square and square everything up. If someone who owed you money got sick you were very concerned about their recovery.

BTW, if you want to follow the a most outrageous and violent repression of peaceful student protests now at UCL then follow David Graeber on Twitter or look for #copsoffcampus. God knows what else the establishment is getting away with while we're all telling one another what a great guy Nelson Mandela was.

Permalink Reply by Liz on December 5, 2013 at 16:27

Or maybe people can use credit unions and avoid banks and payday lenders.

And unfortunately this lender offers neither an APR or an idea of how much say '£200 borrowed for 4 weeks' is likely to cost the borrower. A written response from the Citizen's Advice today (and I imagine they see a lot of this) describes this leaflet as "shockingly bad". I hope we can all agree on that at least.

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Permalink Reply by Liz on December 5, 2013 at 16:12

That's fine - we all have our bugbears. As most people who know me will tell you, mine is purple bags

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Permalink Reply by matthew cuthbert on December 5, 2013 at 14:52

Programme on BBC 3 on debt and pay day loans as well as radio 4.
Horrific, people are struggling.

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Permalink Reply by Liz on December 6, 2013 at 18:02

UPDATE:

Reply from Advertising Standards, the gist of which is

The credit advertising you object to appears to fall under the Consumer Credit Act 1974 and subsequent regulations. That being so, I’m afraid we are not entitled to intervene.

They then refer me back to Citizen's Advice who, as far as I know, don't intervene in advertising issues. Perhaps someone with knowledge of the law can explain why this Act is relevant and why it prevents them from acting.

Maybe trading standards is the way to go next.

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Permalink Reply by Abi on December 7, 2013 at 9:06

I also complained and received this reply. It did seem to go against the implications of the article you posted, Liz. All I can assume is that the medium of a leaflet through the door makes it different somehow? Trading standards is definitely the way to go though. I suspect they'll be more bothered by the address issue.

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Permalink Reply by David Schmitz on December 7, 2013 at 9:42

It appears to me that the advertisement does not engage the relevant regulations (The Consumer Credit (Advertisments) Regulations 2010) because it does not mention anything about the rates charged, it does not say that the company provides loans to people who could not otherwise get credit and it does not offer any incentive for taking out a loan. That being so, there is no statutory requirement to mention the APR.

However, because the regulations are not engaged, you may be able to persuade the ASA to intervene, as they would appear, after all, to have jurisdiction because of that very fact.

Yes, the OFT is the licensing authority for lending businesses. This will change to the Financial Conduct Authority (FCA) on 1st April 2014.

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Permalink Reply by Cllr Emina Ibrahim on December 7, 2013 at 20:14

The shark does have seemingly pretty teeth!

I plucked up the courage and phoned our friendly money lender as I was convinced he is a bona fide loan shark. I wanted to find out if he has applied for FCA registration as from September 2013 you need to apply in order to legally give credit from 1st April 2014.That's when it all got jittery and tense and he demanded to know who I was and why I was calling him. He said I should complain to my MP if I wasn't happy. He admitted he was a sole trader and operated on the edges of the law! Charges £10 per missed payment letter - so hiding behind the sofa is an expensive option. He said that people like me saw him as the devil and his customers as unintelligent.

But the conversation became rather more depressing when he became philosophical about the job he does admitting it's not the best career choice. I was told some very sad stories about some of his customers - borrowing to buy food and pay the gas bill. But something he said was very stark - he described his regular rounds in Walthamstow and the fact that he now walks past what he sees as "well to do" people collecting parcels from food vans. Talking to a money lender about what he sees while on foot around London was Dickensian to say the least. He said that people in places like Harringay are finding it difficult to make ends meet. Mr Money Lender pleaded that "he did not hold a gun to people's heads" it was their choice. I contend - what meaningful choice ? When you are at rock bottom the choice is clouded.

As the conversation progressed I soon realised that this is probably part of our friends last hurrah before the new regulations kick in so he is taking a scatter gun approach. He said he is nearing the end of his 12 year business.

We need to respond to this by promoting credit unions and a more responsible and cooperative approach to supporting people to borrow who are vulnerable. This needs to be an approach rooted in the concept of social solidarity.

The post from Liz on twitter has displayed to us more then an issue about APR which I appreciate is a bugbear - but rather a stark image of the real financial problems people are going through and the market which seeks to capitalise on that.

Emine Ibrahim

Labour Party Candidate (Harringay Ward)

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Permalink Reply by Cllr Emina Ibrahim on December 7, 2013 at 21:31

He also sounded pretty cornered and I sensed that this was the first time anyone had called him who wasn't looking for a loan so to get two calls in one week took him off guard and made him a bit more candid about the money lending business then Wonga sales people.

Now perhaps he knows how his customers feel when they are cornered weekly at their most vulnerable.

Emine Ibrahim

Labour Party Candidate (Harringay Ward)