Simon Read: Payday lenders must stop making misery for millions

Lenders don't need to be banned, just more tightly regulated (Reuters)

The prospect that rogue payday lenders who target vulnerable people could be shut down within the next three months is exciting. That's what the Office of Fair Trading (OFT) promised this week after a year-long review of the high-cost credit companies.

For far too long payday lenders have been able to get away with flogging their expensive deals to people who can't handle the debt and don't understand the costs, such as disabled Nicola Clarke featured in our story on page 53.

The OFT reported this week that up to half of payday lenders' revenue comes from loans that last longer than just a few days and cost much more because they are rolled over or refinanced.

Behind that statistic is the stark fact that anyone who borrows, say £100, can end up owing three times that or more because of the way payday lenders charge.

Frankly, many people who turn to a payday lender to borrow £100 are desperate. The cash is to pay for essentials such as food or heating. They often struggle to repay the money in time and then very quickly end up in an unaffordable cycle of debt they find impossible to escape from.

This is what must be stopped. Payday lenders don't need to be pushed out of business. They just need to be shackled from profiting from the financial misery of hard-up people.

Whos's to blame for the trillion conundrum?

My mention of a trillion in last Saturday's Your Money comment column prompted a question from reader Andy Laurie. I wrote that "a trillion is a thousand billion. So £4trn looks like this: 4,000,000,000,000."

Andy responded: "I always understood a billion in English to be a million million and in American to be a thousand million. Nowadays it seems a billion in English is only a thousandth of what it used be and I see you use a trillion to mean what I would consider a billion.

"No wonder so many numbers sound so high. When politicians, bankers and others are referring to billions and trillions, how do we know how much they mean? Do you know how this loss of value has come about, or why?" he asks?

I turned to Twitter to find out, publishing a tweet asking the same question. A couple of knowledgeable responses from helpful folk later and I had discovered that it seems we have ex-Labour Prime Minister Harold Wilson, pictured, to blame for the official change in meaning.

Hansard reports that on 20 December 1974 the then PM was asked to ensure that ministers used the traditional British meaning of a million million to mean a billion and not the American use of a thousand million.

He replied in the negative, explaining: "The word 'billion' is now used internationally to mean thousand million and it would be confusing if British ministers were to use it in any other sense."

So the decision was taken at the top level almost 40 years ago.

'Disappointing' is not the word for new RBS debacle

Customers of Royal Bank of Scotland (RBS) and National Westminster (NatWest) banks were unable to withdraw cash, pay for goods and services or carry out telephone or online banking this week. OK, it was for only a few hours late on Wednesday night, but it's not the first time that the bank's account holders have been hit by a major cock-up.

In June last year a software upgrade at the bank went wrong and left millions of NatWest, RBS and Ulster bank customers without any access to their money for more than a week in some cases.

This time round the bank blamed a "hardware fault" for causing the systems to crash. It has promised to compensate customers who experienced problems because of the disruption.

Apparently it has even handed one customer £70 for the embarrassment of having to ask a friend to pay his restaurant bill.

The banking group said in a statement it was "disappointed" with the disruption. Disappointed? The word is totally inappropriate. It's the customers who are disappointed. The bank should be abjectly apologetic.

A blog on the fascinating world of money

You can read a fuller version of the story about the change in the meaning of billion and trillion in my new Money Blog. This week I've also written in the blog about the top 50 money-saving measures, explored why we now have a "generation rent", and reported the story of a former homeless alcoholic who rebuilt his life and now helps other addicts who, like him, ended up drowning in debt.

Coming up I'll be publishing more reasons for you to change banks and will have some suggestions for George Osborne ahead of this year's Budget on 20 March. I'd be glad to hear what you think of it. You'll find the new Money Blog at blogs.independent.co.uk.

s.read@independent.co.uk

Twitter: @simonnread