A 10 percent pay rise has been approved for MP’s

While George Osborne has set down a 1 percent freeze on wage packets for all public sector workers, he approved a 10 percent pay rise for MPs. The pay rise was officially announced by IPSA, (the Independent Parliamentary Standards Authority). Ipsa confirmed that the move to hike the wages of the MPs will go ahead after having debated the move for several weeks. The pay rise of 10.4 percent on a typical wage of an MP pushes the yearly income up from 67,060 pounds to 74,000 pounds.

The fact that there has been a 1 percent freeze on the wages of public sector workers who have not seen a pay rise for years makes the move even more outrageous.

Controversy around the pay rise of MPs

David Cameron disagrees with the move and sees the pay rise as unacceptable. He does not agree that a pay rise of nearly 11 percent should be available to MPs during this time of pay restraint. People all over the country are pinching pennies and appealing to charity just to survive, and the top dogs are first in line for a whopping 10 percent pay rise. Disagreeing may not be enough. The public wants action, namely for Mr. Cameron to intervene to stop the move from going through. A petition from the public has already captured 450,000 signatures.
On the other side of the fence, IPSA defends the decision by pointing out that there is never a fair time to give MPs a pay rise. In the same vein, Ipsa goes on to say that if the move is left too long it could all end up in disaster, much like the expenses scandal of 2009. IPSA says:
“No-one can be in any doubt that consideration of MP’s pay is a toxic issue. A thousand and one reasons can be advanced for putting it off.”

Pay rise: disagreement from the inside

The leader of the House of Commons stood up to Ipsa saying that the government itself found the pay rise inappropriate. Politicians stood in line to decry the pay rise. Liberal Democrats, Greens, democratic unionists, and Ulster Unionists. Surprisingly four Labour leadership contenders also joined in. Everyone pledged to turn the pay rise down.

What has this got to do with Payday?

Very simply, who has the money and who does not? Who has to borrow from a payday? Do the MPs need to borrow from a payday lender? Is that why they earn so much money? So they can’t be seen taking out a payday loan and at the same time decrying the industry and blaming the lenders for all ill in the world.

Yvette Cooper, one of the Labour leadership contenders said of her new wage:
“I won’t take it, if that is impossible then I will put the money towards something like funding an apprenticeship or similar cause…”
Ms Cooper, here is a great idea. Why don’t you go stand outside a payday shop and when you see someone who is clearly too poor to take out a loan, give some of your money to him!

Are loan sharks hijacking your phone? Sharks pester unsuspecting people with texts and calls

Here is a story about loan sharks hijacking a person’s phone. Let’s say his name is John, his story is one that many people across the country can relate to. The first text came through on his number one day at the crack of dawn. The message on John’s phone read:
Hi David. Following your app. for 500 pounds, go to XXX for loans from 1500 pounds, no guarantor. Opt out txt END. 

As John stood there puzzling over why he was getting texts for somebody called David, another message came through:
Hi David, you have been approved for a loan, 1000 pounds, and we can lend you 5000 pounds. Go to XXX . To cancel text STOP.

John did not respond to these messages and it took minutes for more texts to come through on his phone. This time they changed their tactics:
David, your loan of 500 pounds is approved. We can offer you a minimum loan of 1000 pounds. Is this OK? Go to XXX. Opt out txt END.

The texts continued. They offered David immediate funds, funds that could be transferred directly into his bank account, funds of extortionate amounts, and one message after the other that kept subtly changing the message and offering ever more tantalizing opportunities to acquire ridiculous amounts of money with no credit check. By the end of the day, John had over 30 texts on his phone from loan sharks, offering a person called David huge amounts of money. Three weeks later that number had increased to 190 texts from nearly just as many different phone numbers.

Behind the scenes to the illegal loan shark industry

The government swears to crack down on this kind of illegal business activity and Culture Secretary Sajid Javid is determined to bring new regulation to the table. The Secretary is aiming to ban the phone calls and text messages that plague the nation.
Back at headquarters, namely John’s phone, activity had escalated. He was now receiving cold calls.
Suddenly John receives a call from a man, Mr. Brown, claiming to be representing a debt-management company. He told John that his company was happy to help him negotiate out of his debts for a fee. He claimed to be one of the good guys. John was suspicious but decided to listen when Mr. Brown began to explain how these loan sharks operate.

The reason why John’s phone was receiving messages for David is probably because a “David” had given the wrong number somewhere and it was John’s. The sharks, however, also relied on the person texting back with something like:
“My name isn’t David, but I might be interested…”

Another problem is that there are hundreds of businesses across the country that buy and sell databases of personal details of private people. This turns the pond into a feeding frenzy and the sharks try to bite into anything they can get. The messages are automated and can be sent out in hundreds and thousands, bombarding the same numbers over and over again. Finally another money maker, the text that John would send back to “opt out” or “STOP,” can cost up to 3.50 pounds. Thousands of people send in an opt out text that costs 3.50 pounds… you do the math.

Loan sharks, like their cousins the real sharks, should be avoided at all costs. Although I seriously doubt that even Jaws would bite as hard as these thugs.

Loan shark with a conscience!

The Cape of Good Hope boasts not only beautiful scenery, but evidently, a loan shark with compassion.

Recent reports from South Africa tell of a loan shark in Cape Town who has a conscience. This man claims to run a fair business and gives his clients discounts and even writes off their debt. It seems that, as well as the breathtaking views and many exotic experiences to be had, you can also borrow from a loan shark with compassion. This loan shark has eight clients and even though he is aware that he is breaking the law, he asserts that the service he provides is fair and reasonable.

Can a loan shark with compassion exist?

Does the phrase loan shark evoke a warm and fuzzy feeling? Do you feel like cuddling up to one? Do you feel completely at ease and relaxed in the presence of a loan shark as he hands over the cash you need? Is it not with not a small bit of trepidation to think that a loan shark with compassion exists? This loan shark wants to be your friend while you are taking his money. It is, however, highly doubtful that he will want to be best pals when you are having difficulty paying the loan plus the interest back.

Unlike payday lenders, loan sharks are not regulated by the South African National Regulation Agency. In South Africa, much like in the UK, there is a regulator to make sure that laws are followed. Payday lenders operate under certain regulations just as any other financial institution does. This ensures that clients are not overcharged and that they can get help should they end up in a sticky situation. In South Africa, again like the UK, credit checks have to be passed before a payday lender can give out a loan. No such luck with a loan shark.

How compassionate is this loan shark?

Our loan shark with compassion claims that he only serves eight people. He says he feels compassion for them because they all work in shops and earn a pittance. He feels that by lending to them he is helping them attain a better quality of life.
He says, “They need money for necessities or essentials or unplanned things.”
The shark then explains that because he earns so much interest off of his eight clients he often treats them to discounts. One thing he likes to do for his people is to give them some respite over the festive season.
He says: “By the end of the year, when they pay their monthly interest, I’ll write off all their debt.”
While this shark doesn’t seem like one of the big toothy ones that swim in the seas around Cape Town, he is still charging eight people a lot of money to borrow a lot less. So at the end of the day, it’s like getting bit by a shark and then being happy because he only took your foot.

The largest city in Scotland hosts the highest numbers of payday lenders and bookies.

It looks like Glasgow can boast the highest numbers of payday lenders and bookies in the whole of the United Kingdom. According to research, the Scottish city is the capital of quick loan shops and bookies. What’s more, it seems that birds of a feather flock together. According to unidentified campaigners, payday lenders often set up shop next to bookies on the high street. What campaigners call a “worrying combination,” is the temptation the gamblers would have to pop out of the bookies to get some more cash, and then return to their gambling. A vicious circle ensues.

Payday lenders and bookies: Let’s look at the numbers

We already know that Glasgow is in the lead with both payday lenders and bookies. There are a whopping 51 payday lending shops in Scotland’s biggest city. Birmingham takes second place with 45 lending shops even though it has twice the population of Glasgow. Scotland’s other big city, Edinburgh, is home to 28 payday lending stores. Glasgow also takes first prize with the highest number of bookies. The city is home to 243 betting shops. Birmingham once again comes in second with 186. The city of Liverpool has 168, and Edinburgh has 114 betting shops. This information was compiled by the Campaign for Fairer Gambling, who are concerned that,
“The high number of betting shops alongside payday loan shops across Glasgow is a worrying combination and will have serious social consequences unless curbed.”

What happens when payday lenders and bookies set up shop alongside each other?

When payday lenders and bookies do business next to each other on the high street, it is very easy to blame them both for perpetuating a downward spiral to poverty. A spokesman for the Campaign for Fairer Gambling, Adrian Parkinson, expressed concern that highly addictive casino gaming machines in bookies that next door to payday shops would have “serious social consequences.” The UK government has revealed that betting shops will have to apply for planning permission before opening up shop.

Susan McPhee of Citizens Advice Scotland spoke of the problems of poverty,
“We have eight CAB’s in Glasgow and all of them report that they are seeing higher numbers of people in poverty than ever before.”

Gamblers Anonymous released a statement saying,
“More and more people are coming to Gamblers Anonymous because of things like fixed odds betting terminals.”

In the end, it is the responsibility of each person to conduct their lives according to what they believe is right or wrong. Nobody is being tied to a gambling machine or marched into a payday lender. People who can’t stop gambling have a problem with addiction, not payday lenders. People who are not able to make ends meet and resort to high-interest loans are a commentary on an economical, social situation that politicians are paid huge amounts of money to solve. Would they perhaps like to lend some cash to the family that can’t feed their kids?

Family man pushed to brink of suicide by illegal loan sharks

Illegal loan sharks are doing a good job of tarnishing the short-term high-interest loan market’s reputation. Recently a father of six found himself on the brink of suicide because of the mess that he had found himself in after borrowing money from loan sharks. The government funded squad that fights loan sharks, the Illegal Money Lending Team, is there to help cases just like this one and when this victim called the team he was speaking out for the many victims of illegal loan sharks.

It is believed that there are currently up to 300,000 victims of illegal lending across the country. The Illegal Money ending Team has prosecuted approximately 300 loans sharks in the last seven years. Tony Quigley, who is the head of the squad said,

“It really is hideous what loan sharks can do to a community. I believe that we have stopped 25 suicides, but people are often afraid to come forward due to intimidation.”

Illegal loan sharks: An uneasy relationship

The Father of six found himself lining pills up in a row getting ready to swallow them all because he could not see his way out of the massive debt that he owed illegal loan sharks. For nearly three years, he put up with the anxiety of non-stop phone calls and visits from the sharks demanding payment of loans. The sharks would threaten to break the windows of his house and even visit him accompanied by intimidating thugs. He just couldn’t take it anymore. What had started as a 20-pound loan, ended up in a 7000-pound hole.

Illegal loan sharks set the trap

The ex-RAF serviceman had quit his job to look after his disabled wife. He was making a good income, but once he left his job, his income decreased, and he had no savings to fall back on. A friend gave him a card with a man’s name and number and told him to call for a little loan. He started off borrowing 20 pounds, and as the interest rate was 50 percent, he would have to pay 30 pounds back. The loans got bigger. They went from 20 pounds to 100 pounds and up to 1000 pounds. One of the loans of 900 pounds accrued interest of 2100 pounds because he could not pay it back for several months. Alongside the extortionate interest, he was also often visited by the loan shark and not for a pleasant cup of tea. As our victim lined up his pills, he found himself unable to leave the people who relied on him, namely his family. Instead, he did the best thing he could have done in his situation. He called the Illegal Money Lending Team. Because he spoke out, the sharks that were terrorizing him were investigated and arrested.
Illegal loan sharks are not out to conduct fair business transactions, and it is, therefore, a step in the right direction to see the payday industry regulated.

As the regulations begin to bear fruit, so the lenders are seen more as legitimate credit providers than shady loan sharks.

Crackdown on payday lenders: The endless cycle of debt

One of the largest payday players on the market has taken it square on the chin as the Financial Conduct Authority (FCA) begins to crack down on payday lenders. Some of the payday companies that occupy the largest section of the market have reported losses of up to 37 million pounds in 2014. These are companies that prided themselves on approving loans instantly and with not many questions asked. With the new regulations, this kind of business is a thing of the past. At present, because of the crack down on payday lenders companies have engaged in trying to repair past problems and repair the reputation of payday lenders while gaining acceptance as legitimate members of the financial services industry.

Crack down on payday lenders: Where to go for a loan now?

The crack down on payday lenders begs the million-dollar (or should I say pound?) question, where do those who need a loan go to now? The most obvious answer is that those who cannot get a loan from mainstream credit or payday lenders will have to resort to illegal lenders and loan sharks. However, FCA research shows that only 5 percent of customers who found their application for a payday loan denied actually went ahead and considered a visit to the loan shark.

StepChange debt charity sees payday loans as highly dangerous, and that people are often trapped and fall into a spiral of debt. In 2014, 12000 people out of 75000 who approached the charity for help owed on up to 5 or more payday loans. What usually happens is that people take out a payday loan, find that they can’t pay it back, so they take out a second to pay the first. Similarly, a third loan is taken out to pay the second and so on and so forth. The hole of debt gets deeper and deeper.

What the charity has to say about a post-FCA world where payday is regulated there is a misguided assumption that if people cannot access payday loans, they are going to have to find an alternative form of credit. However, people who are already in financial difficulty do not need a new form of short-term high-interest credit. What is needed is credit that is affordable and sustainable.

Alternative credit post ‘crack down on payday lenders’

So far people, on the whole, have turned to alternative forms of credit to pay off existing credit. Not only is it true for payday loans but also of credit cards and personal loans. It is a lethal trap once paying credit with credit has begun. The charity prescribes early intervention to curb debts from mounting. The government has also recently put forth plans to consult on the possibilities of creating “breathing spaces.” Freezing interest rates and charges on loans for people that have serious debt issues would be one way to break this vicious cycle of lending and borrowing.

The regulator has thrown its weight around but payday lenders will survive?

It doesn’t look pretty when one of the biggest players in that industry has reported losses to the tune of 37 million pounds in 2014. This comes while the FCA (Finance Conduct Authourity) was busy looking into how the payday was to be regulated. It was only in January 2015 that the FCA published the regulations, and interest rates were capped, roll overs were limited and lenders are obliged to share information regarding credit ratings of their customers. Loan comparison sites have also been introduced and lenders must publish their fees and charges against other payday firms.

That same company has predicted even further loses in 2015, and have been the brunt of jokes on social media by people extending loans at an APR of 5000%. Many other companies report a loss of up to 50% of their client base. Lending volumes are plummeting across the board by up to 40%. Some companies are considering a complete overhaul by changing their name and the credit options that will they offer. Another change that seems to be prevalent amoung lenders is a more conscientious shift in lending models. Companies are taking a more responsible approach, such as only end to clients who can afford to repay the loan, or not selling loans that require a lump sum repayment. All of these changes are examples of how payday companies are eager to put the past behind them and start on a fresh foot. Payday lenders will survive.

Not all payday lenders will survive, more than half to go!

The FCA reports that approximately 400 payday operations are currently licensed to do business in the UK. However, the deadline to apply for the new licenses under the new regulation was in February, and the FCA states that the processing of the applications will take months to complete. The regulator has also stated that it does not expect as many companies to apply or pass the strict new criteria.

Richard Griffiths, of the CFA (Consumer Financial Association), estimates that there are 30 odd lenders in the UK that are already operating in line with the new regulations. He also predicts that most of the smaller payday companies will go out of business once the bigger companies take over. They will simply not be able to compete, or don’t want to go through the assessment process.

Payday lenders will survive with the help of new and improved products

When asked, a spokesman from a large payday lending company said that the reputation of payday lenders needs to be neatened up and that the regulations and assessments were going to bring new life to the industry. He went on to say,

“Could you start a payday business today within the cap and be profitable? Yes.”

Predictions suggest that this will be the advent of the new face of payday. These companies cannot simply rely on one product, namely one short term high interest loan at a fixed price. They are going to have to come out with a range of different offerings for their customers in order to keep afloat. Could it be that payday will ascend to stand beside the likes of a credit union, or a building society?

What do you need in order to start a payday loan shop?

If starting a payday loan shop is something that you are interested in then here are some tips on how to go about it. There are many stories and urban legends of those who won millionaire status from opening a payday loan shop with as little as 500 pounds. If this is true then the shop must have opened in his Mother’s basement, where it was unlikely that any funds for rent were available. With 500 pounds, our millionaire must also have started handing out very meager loans. Even if he had slapped an eye watering APR on the teeny loans, and back then you could pick and choose your APR as you pleased, it would still take a long time to turn over the kind of profit that would take him into a shop on the high street. Anyway, who wants to start up business in their Mother’s basement? There is something a little fishy about it (or should I say ‘sharky’).

Our conclusion is that you need a lot more than 500 pounds and a healthy amount of business savvy.

Start a payday loan shop properly

As a payday lender, the basic rule is that you need money to make money. This means you are going to want to have enough money to lend out so that you get a decent return and can start to grow your business. People don’t want to come and borrow 5 pounds, they want to borrow 155 pounds. So basically a good amount to have on hand to start a payday loan shop is around 30000 pounds. You will need to use a quarter to rent and design the interior of the shop. Then you will have to spend some money marketing your shop and the rest will be for lending out. You cannot start a payday loan shop if you do not have a generous capital base with which you can begin to lend out to clients.

A franchise is another option to consider. It will add dramatically to your start up costs but at the same time your marketing and demographics are already taken care of. Under a popular franchise banner, you are guaranteed customers.

Start a payday loan shop: it seems so risky, what if my debtors don’t pay back?

First of all, it is always a good idea in the payday industry to squirrel away some funds in reserve. This is because it takes a bit of time to underwrite size up your customers. It is a matter of finding out which customers are reliable to lend to. It will take a little time and a few knocks but you should come right quick enough. Keep on top of your numbers so that you now how to project and keep your levels of default in place. Don’t be too dejected when people don’t pay back. This is part of payday! The good news is that if you d your homework and stay on top of your game, profits should be coming through the door within 3 to 6 months.

Outrage! A shop has opened in London offering pocket money loans for kids

We have definitely gone one step too far if there is a payday company that is targeting children. You would have to agree that a lender offering pocket money loans for kids needs to be stopped. However, there it is, at 77 Stroud Green road in London. The lender is offering loans to youngsters all across London at rates as low as 5000% APR. The shop front and interior is set up solely to cater for youngsters and offers a wide range of loans and credit packages.
Yes! We are outraged too.

Pocket money loans for kids – an installation by the artist, Darren Cullan

We can all relax! The payday shop selling pocket money loans for kids is pure satire. Darren Cullan has created a payday shop that lends to children as a commentary on the future of the industry and the growing need for credit in society. The exhibition is also a commentary by Cullen of how the consumer credit industry preys on children. Cullan says:

“[The project’s aim is to] …take our consumer debt culture to its logical conclusion.”

He goes on to point out that,

“Almost all payday loan companies have cartoon mascots, animated characters sing-along jingles in their adverts. Their high street shops often have play areas full of toys and some of them hand out balloons and sweets at the counter. It’s a clear fact they target children, as both a means of persuading their parents , also as a way to groom the next generation of indebted customers.”

Cullan explains that people who come into the shop are horrified until they are reassured that it is not for real. Still there was a certain drama added to get the point across. Cullan answered such questions from visitors as:

  1. Isn’t it immoral to give pocket money loans to kids?
  2. Yeah, absolutely.
  3. Could I force children to repay their loans?
  4. Well we would have their address, but they could always run away from home

Of course it doesn’t need to be said that every visitor to Cullan’s payday shop for kids was shocked. But so is Cullan.

“They’re appalled that a company is targeting kids for loans, and so am I, but the worst thing about it is I’m not the only one doing it.”

And what is the point?

The point is that Cullan’s project has not really tarnished the business model of payday lenders, it has, instead, brought into sharp focus how many businesses in western civilization rely on children to sell their products. Payday lenders may use sweets, balloons, cartoons and mascots, but have a good think about it, how many businesses rely on exactly those same things. Supermarkets, restaurants, shopping malls, airlines… free balloons, free toys, free playgrounds, free video games. In fact, there is a whole army of marketers and researchers that analyse and test kids to find out what they want and don’t want. They take MRI scans to find out how their brains work, and pay expensive psychologists to use the most sophisticated technology to figure out how to get children to buy stuff. That is scary right there.

Debt and stress – the terrible twins

Debt and stress are inextricably linked in the 21st century but this is not a new phenomenon.

The Debt and Stress Connection is very real for many people as worrying about the health of your bank and other financial accounts can really make your ill.  When all is doom and gloom around you, it’s difficult to remain positive.   Better not to watch the news or absorb the newspapers.

When money gets tight, you can become a stifled prisoner of it.  For many almost every waking thought is about money and the juggling act of being able to pay for petrol but not for movies.  Or health insurance vis a vis children’s birthday gifts.

Debt and stress and costly health impacts

If you are single or in a relationship being honest or real about money is step 1.  Getting on top of the money battle is so much about attitude.  With the right positive attitude, it is a mental conditioning that will help you win through.  If you don’t, you could be on the way to getting sick more easily or risk further serious health complications like heart problems.    Ill-health even when we have the NHS in the UK is costly on various fronts.

It is common knowledge that the debt and resultant stress factor impacts on your health.   The costs are medicine, taking time off work (maybe lost income), feeling miserable and fatigued.    With being stressed and then ill this compounds the misery preventing you from enjoying simple free things like walks in the park (good for energising, positive mood swing) or visiting the many free attractions that abound in Britain.  The endless list includes museums, art galleries or festivals, and local sports matches.   Be disciplined about getting out and about enjoying activities that cost nothing and won’t therefore add to your stress levels.

Debt and stress and financial fitness

Share your debt problem with your partner or a trusted family member or friend.   Adopt a plan of action.   In the UK there are many local (non-charging) organisations to help you.   If you know you are not alone, that is a huge shift is tackling the financial Everest.

Once you are managing your finances aided by a monthly budget, the stress will diminish.    Then get creative about managing your income and creating new, additional incomes.   It may be taking a second shift or part-time work, or it may be entrepreneurial, a new business.   The new business may take time so say goodbye to endless TV.  You are on your path to financial fitness.   You are getting financially strong with this renewed attitude.

Know your money life.   That old expression based on “take care of the pence and the pounds will take care of themselves” is still true.  The expression is really about money attitude and exercising your financial muscles.   Part of this approach is about self control and creating new habits.  Replace the spend, spend, spend habit and with that the stress, stress, stress with save, save, save.  Build your money framework, get strong and say goodbye to debt and stress.

Debt and Stress – are there positive outcomes?

Yes is the short answer to the posed question.   Use the situation to your advantage with the life lessons attached so it never ever happens again.

You don’t want to be counted within the majority of Britons that highlight debt or lack of money being the source of stress in their lives.  The impact of such debt and stress combination is very taxing on family life too.   Hence encourage yourself to take joy in the great outdoors, gain so much culture and instil values of economising.  Your children will value these life lessons in this ever competitive world drowning in consumerism and accumulating stuff.   Aim to be debt and stress-free.