Regardless of your viewpoint, you have to feel a degree of sympathy for payday lenders at the moment. Already forced to run the gauntlet of customers who seem happy to borrow but reluctant to repay, they are now also facing up to the threat of more stringent industry regulations after Chancellor George Osborne vowed to cap the total cost of payday loans.
This week, payday lenders were also surprised to face renewed competition from a recently opened online credit union. Having promised to take the fight to payday loan firms and deliver reduced interest rates to disillusioned consumers, there appears to be little respite for those who continue to operate in the vilified short-term loan industry.
Addressing the Political Agenda: Why are the Government Really Targeting Payday Lenders?
The aggressive stance assumed by the coalition government represents something of sudden U-turn, as it has followed years of resistance and an unwillingness to stringently regulate the payday loan industry. In the face of increasing pressure from political rivals and a growing body of disgruntled consumers, however, it has decided to rethink its strategy and propose a significant overhaul of the entire market sector. This not only conveys weakness and a lack of conviction, however, but it also contrasts sharply with the Conservative ethos concerning privatised industries and a laissez-faire economy.
So why exactly have the government decided to target the payday loan industry?
While it easy to highlight political and social pressure as the main reasons for this change of heart, the truth is likely to be far more considered. The government’s true agenda may in fact revolve around the fragility of the nation’s economic recovery, as despite genuine signs of growth under-employment remains a serious and potentially debilitating issue. While this is an exceptionally difficult problem to overcome, however, it is one of the primary reasons why a growing number of citizens have been forced to apply to a same day payday loans direct lender as a way of supplementing their income.
Why Financial Literacy and a Healthy Job Market are Key to Tackling Debt in the UK
With this in mind, it may be that the government are attempting to divert attention away from their own failings by punishing firms within the payday loan industry. After all, the rising to prominence of payday loan providers is a consequence rather a trigger and must be considered in line with an open and demand-led economy. Only by tackling issues such as under-employment and financial literacy can the government truly eradicate debt in the UK, which in turn will help to regulate the short-term lending industry through improved fiscal decision making.
Regardless of the government’s true agenda, their willingness to change position and contradict the principles of a laissez-faire economy proves that they are serious about regulating the payday loan industry. Governments that choose to interfere with private industries are always treading on dangerous ground, however, as it opens up the possibilities for other high profit markets to come under scrutiny. Not only does this create a significant conflict of interests, but it is also an ineffective regulatory method as firms simply restructure their pricing to remain compliant without compromising profits.
This week, payday lenders were also surprised to face renewed competition from a recently opened online credit union. Having promised to take the fight to payday loan firms and deliver reduced interest rates to disillusioned consumers, there appears to be little respite for those who continue to operate in the vilified short-term loan industry.
Addressing the Political Agenda: Why are the Government Really Targeting Payday Lenders?
The aggressive stance assumed by the coalition government represents something of sudden U-turn, as it has followed years of resistance and an unwillingness to stringently regulate the payday loan industry. In the face of increasing pressure from political rivals and a growing body of disgruntled consumers, however, it has decided to rethink its strategy and propose a significant overhaul of the entire market sector. This not only conveys weakness and a lack of conviction, however, but it also contrasts sharply with the Conservative ethos concerning privatised industries and a laissez-faire economy.
So why exactly have the government decided to target the payday loan industry?
While it easy to highlight political and social pressure as the main reasons for this change of heart, the truth is likely to be far more considered. The government’s true agenda may in fact revolve around the fragility of the nation’s economic recovery, as despite genuine signs of growth under-employment remains a serious and potentially debilitating issue. While this is an exceptionally difficult problem to overcome, however, it is one of the primary reasons why a growing number of citizens have been forced to apply to a same day payday loans direct lender as a way of supplementing their income.
Why Financial Literacy and a Healthy Job Market are Key to Tackling Debt in the UK
With this in mind, it may be that the government are attempting to divert attention away from their own failings by punishing firms within the payday loan industry. After all, the rising to prominence of payday loan providers is a consequence rather a trigger and must be considered in line with an open and demand-led economy. Only by tackling issues such as under-employment and financial literacy can the government truly eradicate debt in the UK, which in turn will help to regulate the short-term lending industry through improved fiscal decision making.
Regardless of the government’s true agenda, their willingness to change position and contradict the principles of a laissez-faire economy proves that they are serious about regulating the payday loan industry. Governments that choose to interfere with private industries are always treading on dangerous ground, however, as it opens up the possibilities for other high profit markets to come under scrutiny. Not only does this create a significant conflict of interests, but it is also an ineffective regulatory method as firms simply restructure their pricing to remain compliant without compromising profits.