The popularity of payday lenders is a sad symptom of post-crash Britain.
They allow quick and easy access to cash for people who desperately need it, but usually have massive - really massive - APRs. This means that many customers end up in worse financial situations they before they did before taking a short-term loan out.
Using a payday lender may also leave a damaging mark on your credit rating, making it more difficult to get a sensible loan or a mortgage in the future.
It must be said that the Office of Fair Trading hasn’t done a great job of keeping the Wild West of short-term lenders in check, often seeming like a meek supply teacher feebly bungling its way through a tough trigonometry lesson with a class of problem children, tears welling in its eyes as paper aeroplanes whizz past its hair and a rising chorus of boos, catcalls and raspberries rings in its ears.
But there’s a new sheriff in town.
Enter the Financial Conduct Authority, which has just ridden into the payday lending gulch on a snorting, inky-black steed and issued a booming edict to the industry to get off its horse and drink its milk.
The FCA’s proposed tough new measures – which critics claim don’t go far enough – include more rigorous financial checks on the ability of people to pay back loans, fag packet-style ‘health warnings’ and unlimited fines for payday lenders who’ve been up to no good.
With a steely glint in his eye, Sheriff Martin Wheatley, the FCA's chief executive, drawled: "Today I'm putting payday lenders on notice: tougher regulation is coming and I expect them all to make changes so that consumers get a fair outcome. The clock is ticking," presumably before firing a jet of chewing tobacco into a nearby spittoon and cantering off into the dust as a church bell rang for high noon.
Short change – money news in brief
George Osborne, sporting a natty new hairdo, has warned that young benefit claimants will have to ‘work’ for their dole. This parish’s Felicity Hannah has offered an alternative view to these plans on MSN, and it’s worth a read.
That appointment at Toni & Guy must really have imbued George with confidence – he also revealed that he will freeze fuel duty until 2015. You go girlfriend!
Those looking for a slice of mortgage action had cause to celebrate, as David Cameron brought forward his Help to Buy measures by three months. However property and business groups reckoned the loan guarantee could produce a bubble in the market. Santander reckons 1.7 million people will use Help to Buy over the next year.
Hot dang! EDF and First Utility revealed that they would be freezing gas and electricity prices, amid predictions that bills would be on the rise.
On Covered mag this week
Heard about that Breaking Bad thing that’s on the telly? It’s meant to be quite good. Anyway, here are eight financial lessons from the acclaimed series, as learned by Felicity Hannah.
Ever fancied building you own home? We’ve got the infographic to help you on your way.
Rebecca Lees took a look at the ins and outs of being self-employed.
“Are there valuable rare coins jangling around in your pocket?” asked Dan Moore.
Phil Huff – aka ‘The Huff’ – ran the rule over the new Toyota Auris Touring Sports.
Join us NEXT WEEK for another THRILLING instalment of THE MONEY SHOT