{"id":2824,"date":"2015-01-26T08:00:32","date_gmt":"2015-01-26T08:00:32","guid":{"rendered":"http:\/\/unitelive.org\/?p=2824"},"modified":"2015-01-26T12:49:58","modified_gmt":"2015-01-26T12:49:58","slug":"payday-lending-global-virus","status":"publish","type":"post","link":"https:\/\/unitelive.test.igniteamt.com\/?p=2824","title":{"rendered":"Payday lending: a global virus"},"content":{"rendered":"
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Today (January 26) marks Blue Monday, the day that an academic calculated, 10 years ago, to be the most depressing day of the year.<\/p>\n

 
\nFrom a spike in divorce rates, to miserably cold weather, to higher levels of debt following the festive season, the last Monday of January is a depressing one indeed.<\/p>\n

 
\nToday UNITElive shines a spotlight on the millions of people sinking deeper into debt at the hands of payday loan sharks.
\nWe spoke to payday lending expert Carl Packman about his new book, Payday lending: Global growth of the high-cost credit market.<\/em><\/p>\n

 
\nFace of the recession<\/strong><\/em><\/p>\n

 
\nWhen the world lurched toward recession in 2008, payday lending had been lurking beneath the surface for decades.
\nNow, the high-cost credit market is all over the news, seemingly every day, from Wonga\u00e2\u20ac\u2122s being forced to write off \u00c2\u0141220m in bad loans<\/a> to the CMA proposing new payday lending reforms<\/a> .<\/p>\n

 
\nBut Carl Packman was one of the first people to take a close look at high-cost credit, years before most of us even knew what a payday lender was.<\/p>\n

 
\n\u00e2\u20ac\u015bIn 2011, I lived in an area\u00e2\u20ac\u201c Kilburn in northwest London–that was starting to become what the BBC called \u00e2\u20ac\u0098the face of the recession,\u00e2\u20ac\u2122\u00e2\u20ac\u0165 explains Packman. \u00e2\u20ac\u015bYou had all these stores on the high street, like Woolworth\u00e2\u20ac\u2122s and Curry\u00e2\u20ac\u2122s, that had shut down. They were replaced with these slightly strange finance places that weren\u00e2\u20ac\u2122t your mainstream banks.\u00e2\u20ac\u0165<\/p>\n

 
\nIt was from this transformation of his neighbourhood that Packman was inspired to probe more deeply.<\/p>\n

 
\n\u00e2\u20ac\u015bI have quite a few friends who\u00e2\u20ac\u2122ve gone to these payday lenders for various problems they\u00e2\u20ac\u2122ve had in their financial lives,\u00e2\u20ac\u0165 he says.<\/p>\n

 
\n\u00e2\u20ac\u015bAt one point, when payday lenders weren\u00e2\u20ac\u2122t so widely known, it was very difficult for people to talk about. They were embarrassed. You\u00e2\u20ac\u2122d be surprised by how many people have taken out payday loans. It\u00e2\u20ac\u2122s not something that\u00e2\u20ac\u2122s specific to certain communities.\u00e2\u20ac\u0165<\/p>\n

 
\nGlobal growth<\/strong><\/em><\/p>\n

 
\nPackman\u00e2\u20ac\u2122s latest payday lending book, just recently published by Palmgrave MacMillan, is an extension of his first book, Loan Sharks, which focused on the blossoming of payday lenders in the UK. In Payday Lending, Packman goes global.<\/p>\n

 
\n\u00e2\u20ac\u015bThe problem of the global growth of the industry are the global networks,\u00e2\u20ac\u0165 Packman notes. \u00e2\u20ac\u015bMany people tend to think that payday lending is relatively small. And in consumer credit terms in the UK, it is relatively small. But that\u00e2\u20ac\u2122s not to say it isn\u00e2\u20ac\u2122t big business.\u00e2\u20ac\u0165<\/p>\n

 
\n\u00e2\u20ac\u015bWhen you dig a little deeper, you find lots of them are owned by the same people and have lots of operations in different countries,\u00e2\u20ac\u0165 he added.<\/p>\n

 
\nHe gives the example of Cash America, which started as a single pawn shop in the 1980s in America. It then slowly morphed into an enormous payday lender when the industry became more formalised in the 1990s. Now, Packman says, Cash America owns various payday lending brands globally, including Quick Quid and Pounds to Pocket in UK and DollarsDirect in Canada in Australia.<\/p>\n

 
\nPackman said his motivation for writing a second book was to give the entire story of the industry that\u00e2\u20ac\u2122s preying on millions of workers who\u00e2\u20ac\u2122ve run out of options.<\/p>\n

 
\n\u00e2\u20ac\u015bThe more I developed my research, I realised it\u00e2\u20ac\u2122s really a half-baked story if we only limit it to one nation alone. It was necessary to address this particular problem as one that\u00e2\u20ac\u2122s connected globally,\u00e2\u20ac\u0165 he noted.<\/p>\n

 
\nIn Payday Lending: Global Growth of the High-Cost Credit Market<\/em>, Packman gives an all-encompassing history of payday lenders, from their origins in American to its development in the UK and beyond into Australia and the rest of the European Union.<\/p>\n

 
\nPackman explains why payday lenders have grown particularly in Western economies.<\/p>\n

 
\n\u00e2\u20ac\u015bPayday lending tends to thrive in particular environments,\u00e2\u20ac\u0165 he said. \u00e2\u20ac\u015bFirst of all, they develop in places where there is looser regulation of finance in general. Then there\u00e2\u20ac\u2122s also the added factor of the reduction of wages in relation to the cost of living.\u00e2\u20ac\u0165<\/p>\n

 
\nSolutions in sight<\/strong><\/em>
\nPackman argues that even though payday lending makes up a relatively small portion of consumer credit in total, millions aren\u00e2\u20ac\u2122t able to access other options that are more affordable and less predatory. The more the industry grows and exploits this lack of options, the number of people vulnerable to long-term debt traps will inevitably grow in tandem.<\/p>\n

 
\n\u00e2\u20ac\u015bPayday lenders advertise themselves as quick-fix solutions, but as is so often the case with such solutions, they can turn into long-term problems, into a cycle of debt you can\u00e2\u20ac\u2122t get escape,\u00e2\u20ac\u0165 Packman explains.<\/p>\n

 
\nSo what\u00e2\u20ac\u2122s the answer to an industry that had 1.6m people take out \u00c2\u014110m in loans last year, many of whom reported extreme financial distress and an inability to pay these loans back?<\/p>\n

 
\n\u00e2\u20ac\u015bThere are two things, and these are not mutually exclusive,\u00e2\u20ac\u0165 said Packman. \u00e2\u20ac\u015bThere needs to be a better regulatory system addressing the problem. Most countries, including the UK, do have regulations with regards to fair practices\u00e2\u20ac\u201dhow they collect debt or how they carry out affordability assessments.\u00e2\u20ac\u0165<\/p>\n

 
\n\u00e2\u20ac\u015bBut the problem is enforcement of those rules. Regulators need to introduce more stringent regulations over pricing,\u00e2\u20ac\u0165 argues Packman.<\/p>\n

 
\nPackman said that the basic premise over which payday lenders compete is speed of service, not price.<\/p>\n

 
\n\u00e2\u20ac\u015bUnlike say, supermarket grocery chains, which advertise price deals on the things they sell, payday lenders advertise how quickly they can put money into your account,\u00e2\u20ac\u0165 he said. \u00e2\u20ac\u015bThis incentivises irresponsible lending, which creates a broken market.\u00e2\u20ac\u0165<\/p>\n

 
\n\u00e2\u20ac\u015bConsumers are then inherently the victims of a broken market,\u00e2\u20ac\u0165 he added.<\/p>\n

 
\nThe second solution, in addition to stronger regulation, Packman says, is concerted investment in alternative options for those who don\u00e2\u20ac\u2122t have access to other forms of credit, such as credit cards.<\/p>\n

 
\n\u00e2\u20ac\u015bWhat\u00e2\u20ac\u2122s needed is investment in credit unions and community banks, but also removing some of the barriers that keeps these alternatives from competing with big banks.\u00e2\u20ac\u0165<\/p>\n

 
\n Payday Lending: Global Growth of the High-Cost Credit Market<\/em> can be purchased here<\/a>.<\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Today (January 26) marks Blue Monday, the day that an academic calculated, 10 years ago, to be the most depressing day of the year.   From a spike in divorce rates, to miserably cold weather, to higher levels of debt following the festive season, the last Monday of January is a depressing one indeed.   […]<\/p>\n","protected":false},"author":1,"featured_media":2837,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[17],"tags":[220,222,221],"wps_subtitle":"On \u00e2\u20ac\u0098Blue Monday\u00e2\u20ac\u2122 we speak to payday loan expert Carl Packman","_links":{"self":[{"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/posts\/2824"}],"collection":[{"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2824"}],"version-history":[{"count":4,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/posts\/2824\/revisions"}],"predecessor-version":[{"id":2838,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/posts\/2824\/revisions\/2838"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=\/wp\/v2\/media\/2837"}],"wp:attachment":[{"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2824"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2824"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/unitelive.test.igniteamt.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2824"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}