Published on July 30th, 2013 |
by Eve Stanger
Image © Nusrin 2 2007
There has been a 4000% increase in payday loan complaints since 2007, correlating to soaring profits by organisations like Wonga, with StepChange dealing with 30762 cases of debt in 2013 alone. Though MPs have been fighting as ‘Sharkstoppers’ for years they have far from met their goals and loan shark inflicted debt continues to plague the lives of thousands across the UK. With their use of glamourised adverts and models with screwed on smiles, gushing about how much of a solution the schemes are, it is hard not to fall into their trap. In the face of a lack of full governmental cooperation and the dominance of loan sharks in comparison to alternatives, it seemed like the battle was being lost. But, with the aid of what could be termed divine intervention, could this be changing?
Making use of their 16000 churches in 9000 communities, the Archbishop plans to help Credit Unions to engage with local communities whilst also starting their own. This could help tackle the issue that has been a real problem for Credit Unions – how do you compete with the dominance of loan sharks? MP Stella Creasy, leader of the #sharkstoppers campaign, has recognised this as a real problem, ‘with 18 legal loansharks on my high-street in Walthamstow alone, versus one credit union – we know all too well that our communities find themselves at the rough end of an unfair fight.’ The Archbishop plans to boost awareness and availability of the alternatives that are available and, as he told Total Politics magazine, attempt to “compete [Wonga] out of business” by offering a high quality service – without the sky high interest rate. This scheme targets the underlying problem that, though sufficient Credit Unions exist, lack of access to them is limiting their effectiveness. With a network of churches across the country, and a wealth of volunteers keen to offer expertise to work with them, perhaps this could be the missing link.
Loan sharks tend to target vulnerable groups, as such the impact on students should not be underestimated. 3% of all students have taken out payday loans, this rises to 6% for those over 21 and 10% for those who are parents or carers. (Figures from the NUS.) With the cost of student accommodation having doubled in the last ten years, one third of students coping without any aid from their parents and 50% of students in constant worry about money, it is inevitable that many have turned to payday lenders as a short term solution. In a controversial move in 2012, Wonga attempted to present themselves as the solution to student debt in a campaign that vouched for the benefits of a short time loan. By spotting the opportunity of thousands of students startled by the prospect of fee rises alongside rising living costs, Wonga launched a campaign to offer small and short term loans to students in hardship. But with a 4214% interest rate in comparison to the government’s 1.5%, is it really the solution and alternative it claims to be? However, can credit unions alone save students from falling into the loan shark trap? Unless the Church successfully creates the same amount of awareness and advertising power as its loan shark counterparts, it is unlikely to be effective.
Living in such a media focused world makes us vulnerable to such influences, whereas the Church has a much less significant impact on most people’s daily life. Channel 5 have recently announced plans for a new show ‘Go Hard or Go Home,’ targeting an audience of young people with a desire to see members of the public attempt to complete triathlons in Californian heat or mountain bike across the peaks of Europe. But on the dark underbelly of this show about personal achievement, is its sponsorship from Wonga. What impression will this give to its viewers? Is there an implication that Wonga gives you the opportunity to change your life for the better in the way that the challenges could? How does this reflect on the celebrity who is fronting this show? MP Stella Creasy put Hannah White under fire, criticising the way in which she was using the show and Wonga for profit rather than taking the stance of other public figures who have condemned legal loan sharks. (Notably, Milton Jones in his comment ‘Wonga, it’s payback time!’)
So what can be done to help protect students in particular from legal loan shark when everything seems to be working against us? Perhaps cooperation needs to come from the universities themselves. Universities are increasingly declaring their commitment to fight against payday lenders, with the likes of Keele, Leeds and Sheffield University banning any form of loan shark advertising on their campus. Scale this to cities and there may be a move towards a large scale ban, with Plymouth council recently becoming the first to block loan shark advertisement from billboards. It is clear, that though the alternatives themselves are important, the key to protect people is through awareness. NUS have launched a section of their website dedicated to teaching students about money and funding, targeted at students to make them aware of the real options to manage their finances. Equally, Stepchange has an online debt remedy tool to help offer solutions, that doesn’t include resorting to loan sharks. However even with the growing Sharkstoppers campaign and these tools readily available online, people are still increasingly falling prey to loan sharks.
The impact of the Department for Business Innovation and Skills’ promise of £38 million towards credit unions, alongside the Archbishop’s proposals and the work of the Sharkstoppers campaign will become clear in due course. Rather than fighting loan sharks alone, these campaigns present credit unions as an alternative and as a solution. Perhaps the campaign needs to use the methods of the loan sharks itself, in using familiar faces and powerful advertising to front it – though loan sharks can be criticised on most grounds their marketing genius is undeniable. Reports show that Wonga are latching on to the controversy and producing a new advert campaign, in a parody of the Bible’s Ten Commandments, called the Ten Commitments – in an attempt to demonstrate their commitment to serving the interests of their customers.
However the proposal from the Church has not been from controversy itself. On one side members of the Church itself question whether Credit Unions should really be allowed to practice on Church grounds – is it not sinful? But Welby has recognised that ultimately, a choice of the lesser of two evils has to be made. Here he recognises that attempting to live free from any form of sin (direct or indirect) is impossible, learning to recognise the complexity of today’s world is essential. In general Anglicans have been largely accepting of the proposals, agreeing with the praise from politicians around the country. It is without a doubt that Credit Union’s interest rate of 70-80% is favourable to support in comparison to loan sharks’ sinful thousands. However, with recent revelations that show that the Church has indirectly invested in Wonga by a sum of £75,000, the Archbishop is left feeling embarrassed and irritated.
The effectiveness of the Archbishop’s proposal has yet to become clear, but it is already significant for the way in which is has put loan sharking in the centre of the public eye. Through spreading from the print of the newspapers towards the bubble of chatter on twitter, the high profile news has allowed the issue to reach all those it concerns. Already people, young and old, have begun to take to twitter to express their opinion on the Archbishop’s proposal… or just to retweet Milton Jones.