UK PLC – The new reality by Phil Ryan
I’ve been travelling around the country recently and I’ve become aware in some classic indicators that tell you a lot about the state of any country. So in this new series of articles I’ve decided to examine just a few of these indicators. To give you a brief idea of what I’m referring to I’d like you to consider the following. Many local high streets now have up to 30% of empty and shuttered shops. Larger closed shop premises are now being converted into housing. The fastest growing high street shop openings in the UK are now Pawn Shops and Money Lending outlets coming second to fast food outlets. Another huge growth sector are private bailiff firms and security firms. The biggest spike in TV advertising revenues has come from a plethora of constant afternoon and late night Loan adverts now running almost on a loop. Many local Church groups have turned into Food Banks ie they appeal locally for non-perishable foods and now run weekly drop in sessions supplying poor families with basic foods. And if this weren’t bad enough these groups are noticing the change in the financial and social makeup of these families not to mention the growing demand for assistance. Unsurprisingly there has been an exponential growth in the number of personal debt handling companies. These are the kinds of companies who combine all your debts into one monthly sum and deal with the companies you owe money to. And in a twist that I’ll explain in another article there’s also been an absolute explosion of gambling outlets including bookmakers, slot machine parlours and wall to wall TV, radio and press and poster advertising for national and local lotteries.
So to get us going I’ve picked one of these indicators at random. So let us take a quick peek at the online Personal loan sector. And let me be clear at the outset. The kind of people taking up these online loans are generally those who cannot get access to funds anywhere else due to poor credit history, no assets such as property or vehicles of worth and age and employment status. Just by Googling unsecured loans and entering a few requests I found deals depending on individual criteria starting from APR 9.9% then 175% and finally most at around 2,400% – 4,214.00%. Yes you didn’t misread those last figures. They make up the most common deals available. The most popular loans are for payday loans ie a loan to help people have funds to live on before their next pay cheque goes into their accounts. Previously most of these kind of financial acrobatics were carried out by people juggling credit cards. And of course this generally applied to the low and medium paid. However with living costs rising on all fronts the low paid net is embracing more and more people. This due in part to the fact that people’s wages are fixed and do not rise to reflect price hikes in fuel, travel, food and living accommodation expenses. And the access to credit cards has been severely reduced forcing many people into using the new high street and online ‘money supermarkets’.
So how does it work? It’s very simple to apply. You fill out a form with all your personal details on, you give the company almost complete access to your bank accounts and financial profile and within minutes they mail you an ‘offer’. Note that word. An ‘offer’. In other words virtually anyone will be offered a loan. However this ‘offer’ is often ‘time sensitive’ forcing people to make a quick decision and although it does offer access to money the rates it charges are often eye wateringly expensive. These ‘offers’ rely on a mixture of reasonable sounding language and the disingenuous ‘warnings’ regarding the fact the loans should be considered ‘short term’ only. So effectively people become trapped as they become mired in debts that they can in fact ‘service’. In other words by paying constant small amounts they can gain access to funds. But before you say they shouldn’t take up such terrible loans consider this salient fact. What else can they do? High street banks have stopped both personal and business lending to an absurd degree. The toxic criteria they now set are designed to bar most people. Just as an aside I thought I’d ask my ‘personal banker’ at a well-known high street brand for a small loan of £5,000 just to test the water for my article. Despite being in funds and having property, and being a customer of over twenty years he felt I could only have £3,000 BUT and this was almost Kafkaesque part I had to put £3,000 into my account before they would grant me the loan. Huh? I needed £3,000 but had to find £3,000 that presumably I didn’t have hence the need for the loan in the first place. Wow!
Anyway moving on. The new online loan companies are now mining a massive new client base of those who have no other avenue to funds. And let us be clear these are funds to pay for necessities and not fancy cars or restaurants. I am of course aware that it is the loan appliers own ‘choice’ to accept or not accept but despite all my thoughts of them changing jobs, moving to more affordable accommodation etc in many cases they simply cannot. They are in essence trapped by their own poor financial circumstances. And at the mercy of the high street and online loan companies who have in effect gained a client who cannot leave. And they cannot leave for the obvious fact that their financial circumstances are such that they can only pay off their loan in regular instalments – and now the hook – the instalments slowly rise and rise as the massive APR kicks in over time. As for the ‘these loans are short term only’ line put out by all these companies they know full well that anyone desperate enough to use them will struggle to leave in a short period of time. And so legally they can trap their clients into paying huge interest rates giving the loan companies huge profits and a compliant client group. Just for fun imagine borrowing £5,000 for a year at 4,000%.
So we’ll keep taking UK PLC’s pulse with a look at other indicators into what’s happening to its citizens right now on certain levels across the country. And I hope just this one tiny glimpse into the UK’s new financial success story has informed you a little. The shiny and bright online loan companies that provide money access to families and individuals with their friendly advertising and jokey campaigns. I’ll finish with the news that the boss of one of these wonderful companies recently received an award for services to the financial sector from a grateful government.