Saturday, 5 May 2012

People with money

There is nothing quite like financial vulnerability to eliminate your right to speak. Being poor is one thing, but being indebted adds an entirely different layer of oppression. It never ceases to amaze me how many seem able to advise, without ever experiencing the reality of those they seek to help - people with money telling people without money how to manage it.

Never pay for debt help, PPI or payday loans! Yet thousands of us carry on doing just that. Only recently, a survey found 93% of customers think payday lenders treat them with respect. So loathsome was this thought that Jill Insley of The Guardian sought to undermine the research without the slightest regard for the body of evidence corroborating it from Wonga.

Now, you might say that Wonga is an unreliable source (we’ve checked their statistics, Jill, they’re solid), but could you run a successful business if your entire truck was a con? When you hate the idea of people making money from disadvantage, you have to ask yourself how it happens, if you are to stop exploitation. It’s a dirty job finding out, so I make no apology.

The psychology of “don’t” is powerful. It brings mobile phones into inappropriate social gatherings, cannabis to the school gates and a host of questionable products and services to the consumer who perceives no choice. Meeting Mike Shamash of The People’s Power last week to consider households who never switch energy supply was a real eye-opener.

Even the considerably flawed Money Advice Service has invested some funds to explore why people don’t necessarily do what is best for them. We procrastinate over savings, borrow more when we are in debt, and pay over the odds for goods that we know are opportunistic. I often wonder how many people have done a deal they’d rather forget.

It’s uncomfortable when our economy generates solutions that challenge our comfort zone. Payday lenders say they are transparent and many of their customers seem to agree. It’s all too easy to chastise from the comfort of column or constituency, but when bankruptcy costs some £700 to get by on a mere £20 a month disposable income, is it any wonder we look for alternatives?

The growing market for recession-easers is not as clear as it seems. When you unpick the incentives of loyalty, vouchers and discount codes there is little difference between the profit motive for a share of your belly and that with an interest in debt recovery. Never mind that some claims and debt management firms belong to individuals with social justice at their core. It’s in vogue to tar them all with the same brush.

Our collective failure to comprehend the affair with credit that defined the last decade has left us blind to the pensioner (with fixed income) sold PPI, bank charges slapped on a lone parent suffering unpaid child maintenance and the increasingly unaffordable costs of living. With an average household income of some £26,000, how else do we pay for car insurance, if not by credit agreement for instalments?  Governments past and present are accountable for that.

What disgusts me most in all of the received wisdom is its composite failure to address the real scams, like registered debt charities without a consumer credit licence (not the well-known ones), or brokers quoting a representative APR, when they can guarantee no such thing.  These under the radar cons are what cost people dear - deal with these, please, before you dismiss Wonga and co.

Those of you who know me well - and there are a few who have watched my journey from lone voice to founding a collective – will know that as much as I may dislike payday loans, paying for debt help or PPI claims, our Coop has confronted me with people, who use these services. Increasingly, not for-profit providers as well as firms ask us how to deliver help transparently, because we cannot afford such arrogance as to think all these people wrong.

Not one of the money-saving pundits predicted the credit crunch, so their authority in addressing the fallout is questionable. I founded Zero-credit to give consumers a say in financial services and every aspect of its vision aims to level each voice alongside yours. I don’t have the answers, but I’d like to think that co-operatively, we all do.

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