A disturbingly effective lobbyist for the payday loan industry

Outlook

“Critics of innovation that refuse to embrace the change [wrought by technology] by trying to hold back the tide could find themselves swept away by modern life.” The critics that Russell Hamblin-Boone was referring to, as he released a weighty report about credit, are those who suggest that payday lenders charging interest rates equivalent to several thousand per cent per annum need their wings clipping.

In case you hadn’t guessed, he is the boss of the Consumer Finance Association (CFA), which represents those payday lenders. If he is right, I will be one of those in need of a life raft, but I’m not sure who this report is aimed at. Mr Hamblin-Boone and the CFA put it together with the aim of swaying the opinions of policymakers and regulators, and there is evidence to suggest that he might just be succeeding.

The report, Credit 2.0: A Commentary on Spending and Borrowing in the 21st Century, tells us nothing we haven’t heard before. It argues that society is changing, lots of people are self-employed or on zero-hours contracts and have unpredictable incomes that can fluctuate wildly. Sometimes they need a little help to manage unexpected bills. Stepping into the breach are Wonga and its heirs, such as The Money Shop and Payday Express. Far from being predatory lenders charging usurious interest rates that cannot be justified on any rational grounds, other than base profiteering, they are portrayed as saintly creatures that just want to provide a service. If only the regulators were not so mean, with their interest-rate caps and rules about responsible lending, the payday operators would be able to help so many more people, argues the CFA.

You might well argue that Wonga’s behaviour in an earlier guise – when it used letters from fake lawyers to pursue debtors – gives the lie to that argument. Even if you accept that the payday loans industry has cleaned up its act since then, there are plenty of authoritative reports that illustrate the damage caused by this sort of high-cost credit.

But that’s not the point I’m making. No, the point is that the parliamentary launch of this report was chaired by none other than the Tory MP for Wyre Forest, Mark Garnier – a Treasury committee luminary who briefly considered a run for its chairmanship. The story was subsequently picked up by the BBC, attracted by the CFA’s warning that recent restrictions on payday lenders and the interest rates they can charge are pushing former customers into the arms of loan sharks.

Stop me if you’ve heard that one before, although recent history suggests that the lines between the two aren’t as clear as Mr Hamblin-Boone would have you believe (see above). But give him his due. The respectable face of a rapacious industry is proving to be a rather effective lobbyist.

If you find that disturbing at a time when Martin Wheatley, the head of the Financial Conduct Authority, has been ushered out of his job out in no small part because of the uncompromising tone he has taken with the financial services industry generally, you wouldn’t be alone.