1 / 20

Debt on our Doorstep: Tackling Loan Sharks and more ….

Debt on our Doorstep: Tackling Loan Sharks and more …. Me. Niall Cooper National Coordinator, Church Action on Poverty Coordinator of Debt on our Doorstep campaign. Debt crisis?. CAB dealt with 47% more consumer credit debt problems over the last five years

tonya
Download Presentation

Debt on our Doorstep: Tackling Loan Sharks and more ….

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Debt on our Doorstep: Tackling Loan Sharks and more ….

  2. Me • Niall Cooper • National Coordinator, Church Action on Poverty • Coordinator of Debt on our Doorstep campaign

  3. Debt crisis? • CAB dealt with 47% more consumer credit debt problems over the last five years • 7.9 million people systematically refused access to mainstream credit in 1999. • Sub-prime market estimated to be worth £16 billion a year to non-standard lenders • Doorstep lending is a booming industry worth around £3.3bn. • Customers of doorstep lenders borrowed an average of £739 a year in 1999.

  4. What’s the story? • “I have a fifteen year old daughter and she needs clothes so I have to get a Provi loan or vouchers. It’s hard. At the end of my benefit I’ve nothing left to pay back the loan and vouchers. I can’t spend money on shopping and bills.” CAP national policy forum participant – 9 July 2001

  5. Mary’s story • Mary, a lone mother on Income Support took out a £200 Provvy 30 week loan – at 330% apr. • One month later, encouraged to take out another £500 loan, £310 more interest - 170% apr. • Mary ran into difficulties, offered a £1,000 loan, further £620 interest over 54 weeks, at 170% apr. • In six months, Mary’s loan of £200 had turned into a debt of £2,227. Profiting from Poverty

  6. What’s the story 2? “I don’t think anyone can understand properly just how it feels, to dread letters coming through the letter box. When they did come you’d feel so ill you’d put the letters behind the mantelpiece – never even open them sometimes.”CAP national policy forum participant – 9th July 2001

  7. Daylight robbery • Lender Loan Repay Period APR • London £485 £900 75 weeks 159% Scottish • Provident £400 £636 53 weeks 164% • Morses £150 £232 31 weeks 365% • CLC £50 £75 15 weeks 1,564% New Economics Foundation, Profiting from Poverty, 2002

  8. Extortionate retail credit • Product Argos Brighthouse • Sanyo 28” TV £399 £562 cash price £809 without service £1246 with service • New World £330 £422 cash price Gas cooker £607 without service £934 with service • Microwave £99+£17 £104 cash £134 with service £207 with serviceCathrine Haines, Bullwell Credit Union, 2003

  9. Provident Financial: Profiting from poverty • FTSE 100 company • Customers: 1.5 million • Loans: Average £800 (& getting bigger) • Average apr: 180% • Profit per £1 loaned: around 50p • Profits: £160 million • Expanding into Eastern Europe • Co-op: 5% shareholding

  10. Impacts • Debt spiral • Stress and poor health • Child poverty • Work disincentive • Undermines neighbourhoods

  11. Desperation… • “At the moment I’m on income support and child benefit. I’ve used the Provvy and Shopacheck and I’ve been unable to keep paying them so I don’t do that no more. Now I have to buy from shoplifters so I have money to look after myself.” CAP national policy forum participant – 9 July 2001

  12. Market failure? • 71% of home credit market held by 4 companies • Inability for borrowers to "switch" to cheaper lenders • Interest rates out of line with actual levels of risk involved • “Provident Financial don’t have any competition. If there was competition people would offer lower charges, but is seems there is none. People have little option.” cAP national policy forum participant – 9 July 2001

  13. Policy Failure? • Vulnerable customers • + Lack of competition • + Lack of regulation • + No ceiling on charges • + Lack affordable alternatives • + Failure of Social Fund • + Lack of money advice and budgeting • = Extortionate lending

  14. Joined up Government? • “Without action across government, tighter regulation alone could make matters worse. To be effective, tougher legislation needs to be combined with support for initiatives that widen access to affordable credit and money advice.Profiting from Poverty

  15. Holistic Policy Solutions • Stronger regulation, including cap on interest and charges • Develop affordable alternatives • Money advice and budgeting • Community development finance institutions

  16. Ireland • Strong Credit Union movement: 30%+ of population • Money advice and budgeting service: Nationally funded, 60 centres

  17. 16,000 members (50% population) Loans at .875% per month (c10%apr) Savings: protection & annual dividend Life savings, loan protection, death benefit insurance House, contents and car insurance Mortgages Bureau de Change, rail tickets and hotel discounts Clonmel Credit Union

  18. Debt on our Doorstep • Membership network • Lobbying for coordinated Government strategy for ‘fair finance’ • Working with media and MPs • Lobbying civil servants and Ministers • www.debt-on-our-doorstep.com

  19. What you can do • Evidence of ‘market failure’ • Encourage MPs to get involved • Send a postcard to Patricia Hewitt • Join Debt on our Doorstepwww.debt-on-our-doorstep.com

  20. Time for a change… “People are still trapped in debt and poverty. When will change come?”CAP national policy forum participant – 9th July 2001 www.debt-on-our-doorstep.com

More Related