The fact that people can end up paying £1,500 for a £300 cooker because of sky-high interest rates is an outrage, and should be banned. There is no room in a civilised society for this level of usury.
Nor is this an isolated case, but one of many uncovered by the Financial Conduct Authority (FCA) during its investigation into high-credit.
There are up to 400,000 people using such egregious credit schemes, where they pay three to four times the original cost of the product. They are inevitably the most vulnerable in society: single parents aged 18 to 34 are three times more likely to have one of these loans than the national average.
Maggie Pagano says the fact that people can end up paying £1,500 for a £300 cooker because of sky-high interest rates is an outrage, and should be banned
So the FCA’s proposals published yesterday to clamp down on rent-to-own lending, doorstep lending and catalogue shopping, are to be saluted. The FCA plans to cap high-credit loans, either with caps on fees or interest rates, and a final decision will be made by the end of the year and should be introduced next spring.
This seems an age away. But the FCA’s Andrew Bailey says extra time is needed for the watchdog to work out the impact of caps, and how to structure them.
It should also investigate the myriad of TV instant loan adverts now ubiquitous on our screens. These are seductive ads, making borrowing for a new fridge look as simple as when Samantha twitches her nose to get the washing up done in the Bewitched TV series. And much more dangerous.
It’s disappointing that the FCA is still prevaricating over how best to crack down on unarranged, and arranged, overdrafts. Consumer champion Which? magazine immediately hit out at the regulator, accusing it of dragging its feet over introducing caps on overdrafts, and called on the Government to intervene. Exorbitant overdraft arrangements have been a hot topic for at least a decade.
Maggie says that five years ago, Mark Carney, the current Governor, proclaimed that he wanted a woman to fill the role for the first time in the bank’s 300-year history
Nor is it surprising the banks are still lobbying hard – overdrafts are tasty business. In 2016, banks made around £2.3billion from fees. So it’s understandable that Bailey wants to make sure the procedures are watertight, so banks cannot challenge them in the courts.
For now, banks have been told to text customers about overdrafts and online tools to make bank accounts more transparent. Will these changes protect customers from unarranged charges? Doubtful.
Bailey is a serious man, not the sort to let the banks walk over him or the consumer. If he says there will be action in the forthcoming review of retail banks, we should give him the benefit of the doubt. It’s in his interest too – he is eyeing the Governor of the Bank of England job.
Five years ago, Mark Carney, the current Governor, proclaimed that he wanted a woman to fill the role for the first time in the bank’s 300-year history.
He also promised to ‘grow top female economists all the way through the ranks’ and said how surprised he was that none of the monetary policy committee members were women. (There is one today.) Carney’s ultimate aim was to ‘add to the diversity of macro-economic thinking and add to qualified candidates for the monetary policy committee, including qualified candidates for a future governor’.
He went on to hire Charlotte Hogg as the bank’s first female chief operating officer, then promptly lost her. Then came Dame Minouche Shafik as first female deputy governor but she left after three years. Was Carney being honest, or spouting the political correctness expected of him? Or does the bank have a problem with women?
I ask because a new member of the MPC has been hired – Professor Jonathan Haskel, an excellent candidate from Imperial College. Of the 87 people approached, there were 27 applicants, eight of them women. Haskel was chosen from a final shortlist of five – the other four were women. Hmm.
Teeth into Deloitte
ODD that the Financial Reporting Council (FRC) is suddenly gnashing its teeth by taking Deloitte to tribunal over alleged accounting irregularities at Autonomy. Why now, six years after the scandal emerged?
Could it be because the FRC is being investigated by Sir John Kingman, the chairman of Legal & General. He has been asked by the Government to review the FRC’s powers, assessing whether it is fit for the future. Or not.