Monday, 29 March 2010

Moneyfesto: Knock knock

Who's there? The long arm of the lender – it's no joke. If we want to change irrevocably the appalling dichotmy of wealth and social stagniation that is modern day Britain we need to regulate against doorstep lending; to end it for good. 

If you've never been approached by a doorstep lender, then ask yourself why. The chances are that you're not living on minimum income, in or near social housing and don't have a low credit rating. It's important to note here that there is little to no distinction between poor and no credit rating, meaning that those who have no history present similarly to those who have bad. Indeed, it soon becomes appparent why the lack of social mobility is so prevalent in the UK.

There are those - and I don't blame their ignorance - who are proud to have no debts, who don't use credit cards and regard all lending with scepticism, which is great, of course, if you can afford it. Indeed financial literacy is great when you have the time and appropriate skills to work your way through the comparisons maze. But what if your talents lie elsewhere, or survival demands your attention?

What if circumstances were such that the world as you know it should change - you become redundant, a lone parent, a repossession statistic, what then? All you want is a virtual wallet in which to deposit your depleted income, not some package to exclusive benefits, when those from the State arrive piecemeal. Would you know how to get by? 

Could you cut it on sixty odd quid a week – scouring the supermarkets to feed a family for a fiver, only to consume more salt, fat and carbs than you ever thought possible? The things you used to buy, the lists you used to stick to, are beyond you. You've made every cut that some money saving expert recommends, yet no matter how slavishly you made it, the ends still don't meet.

When would you succumb, a few weeks, a few months, before grabbing at a solution to take you out of this mess? The papers you used to read say that's what these loans are for, and you echoed them, never thinking you'd have to live with the interest in such advice. Petrol goes up, food goes up, the kids' school shoes are falling apart and you think “It can't go on forever. I'll take a risk” - a risk you'd never have dreamed of taking before. 

If you're lucky, you'll get a visit from a legitimate lender, some sub-prime specialist like Provident, charging 500% APR or so (remember the pittance for your savings before they ran out) and if not - the unfortunate side effect of our allowing doorstep loans - a shark who will knee cap you as soon as entertain the notion of being paid a day late. Should you be susceptible to this lending lottery? Should anyone? No. So, if we can ban public smoking to protect the passive majority in this country, the Zero-credit Moneyfesto asks, why on earth can't we legislate to get lenders off our premises now?.
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