Hit the Loan Sharks

Published 23 Jan 2012, Daily Mail, Letters to the Editor

Sir

James Coney in the Money Mail 18th January 2012 (“Banks can easily fix this flawed system”) highlights rightly the fact that the system is geared towards “the vulnerable paying for the better off”.

However, this is only the tip of the iceberg. Banks, Credit Card and Store Card operators, Mail Order companies and worst of all loan sharks and those known by a camouflaged name, the so-called Pay-Day loan providers all work on a similar principle. They can afford to lend money out indiscriminately at exorbitant rates, as these include provisions for defaulting customers: The higher the risk, the higher the interest rate. They are exploiting the socially weak and uneducated by luring them often  into spending money they do not have and  in the most expensive way. Frequently they are driven  deeper into debt and in the end it is invariably the state that has to pick up the pieces with social welfare support. It is a disgrace of the first order and one of the reasons for British private household debt to stand at 1.5 trillion.

The Mail has often been critical of European ways – I wished it could break with this tradition and start a campaign to outlawing this practice of exploiting the weakest group in society. Countries like Germany, the Netherlands, Switzerland have tough usury laws to protect this most vulnerable group. There any contract or deal that carries interest rates above 18-20% pa are nil and void and unenforceable in court. Repeated offenders can be imprisoned. It is noticeable that the above mentioned countries are also those doing reasonably well in the present economic climate.

As this proposal would put half of Britain’s financial services operators behind bars, a law like this would have to be introduced over time and with decreasing rates starting maybe with 30%, which put at least an immediate end to the horrible loan sharks.

Bob Bischof

Bob Bischof Letter printed in the Daily Mail January 2012
The letter as printed in the Daily Mail, 23 January 2012

Letter to the Times: Firing Up UK plc

Bob Bischof Letter to the Times June 2011
Bob Bischof Letter to the Times June 2011

This letter appeared recently in the Times and is republished here:

“Instead of accepting the CEO’s whining about high taxes and too much regulation, the Prime Minister could have interrogated them at the Times CEO Summit about their abysmal performance in world markets. As we heard, Britain has been exporting more to Ireland with 4.5 million people than to the BRICS countries (Brazil, Russia, india, China and South Africa), with nearer 4 billion people. German companies have to cope with far more regulation and carry substantially higher payroll costs, but have managed to reduce unit labour cost by more than 20 per cent in the last decade and raise productivity. Moreover, Germany was until 2009 the largest exporter in the world.
Britain, on the other hand, had a more than 20 per cent devaluation of sterling but British exporters have not taken advantage with higher sales volumes. Mr Cameron is right to try to turn bad regulation into useful regulation, but he should look at taxing profits which stay in companies and are re-investe in markets and products differently from those that are paid in dividends and share buy-backs.
In the absence of credit-induced consumption and state spending to drive the economy, growth depends to a large degree on our companies’ performance over the coming years. One precondition is to increase the skill base. Here again, should the Government beg companies to engage in its ambitious apprenticeship programme or should there be a training levy, against which companies can reclaim some of the cost of training? Either way, feeding companies carrots does not seem to work: more stick might work better.”