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Old 28.05.2014, 22:55
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Re: Church working against Pay-Day Loan lenders

"Pay-day Loans" are a very interesting subject. For starters there is a 'need' e.g. someone with no spare cash has to pay a sudden bill: where does the money come from? i.e how do the poor achieve liquidity?

These loan companies have no competition apart from each other so they can pretty much charge what they want and generally are only limited by local laws. Why is it that huge high-street banks are so inefficient they cannot compete with these, often, one-man band loan sharks? Where has the efficiency of scale disappeared?

It is not uncommon to find unlicensed lenders actually offer much better deals than the licensed ones (a search through the law reports will show as much). So people complaining about pay-day lenders have actually caused the cost to the borrower to increase. i.e. if that god-botherer really wanted to help he should shut up and give charity to the needy.

Another factoid: most loan-sharks are women. Is there not something about the male dominance in society, especially finance, at work here...

Obviously people have a knee jerk about usury but the fact is that when there have been natural disasters it has been found that communities recover quicker the higher the legal limit to the interest rate/charges.

Contrary to another poster's comment in the UK there is regulation and the Financial Conduct Authority (FCA) is constantly tweaking things. IIRC even the Advertising Standards got in on the act once. However the FCA are stuck between a rock and a hard place. If they regulate too heavily the loan companies shut down and the poor are denied liquidity which leads to an 'increase in crime'. (The reason for the quote marks: did you know many incarcerated women's first brush with jail the spiral starts with not being able to pay the TV license? By extension if they got rid of the TV license for 25-44 y.o. women then the female prison population would start to fall). Conversely if the FCA regulate too lightly the pay-day loan companies pull all sorts of tricks to increase their profits.
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