Pay Day Lenders – Power without action is no power at all

News today that the Financial Conduct Authority (FCA) will introduce new restrictions on payday lenders is the culmination of two years of organising across the country.  Using community organising, the Sharkstoppers campaign has told powerful stories of how out-of-control payday lenders have torn apart our communities.

Working with our vice-chair, Stella Creasy MP, Labour Students, a number of trade unions, the Cooperative Party, and a range of local Labour Parties, Movement for Change has built a powerful network of activists that has taken coordinated action to bring about a cap on the cost of credit, the creation of a new financial ‘Harassment Hotline’, and asked that banks to reveal how much they are lending at a local level.

The 300 activists who attended the Movement for Change event at Labour Party conference last week witnessed the power of such stories.  Trina and Serai are two young mums from Swansea.  They are in debt to payday lenders and live with the constant threat of a bailiff’s knock and harassment by doorstep lenders.  After being introduced to a Movement for Change Community Organiser by a local Labour Councillor, they developed their stories and learnt that they can be used as a tool for achieving the change they hope to see in their lives.

Sitting alongside Trina and Serai on stage at our event was Rachel Reeves, and as their stories came to an end they turned to her; ‘We’ve started to get interested enough in politics just in time to hear that you have been speaking a lot about how Labour would help with the cost of living for people like us, including on the cost of credit. Could you briefly give us a few things that Labour would introduce? And, in particular, what Labour would do about the cost of credit’.  Rachel Reeves then stood to join them, and responded by committing that the Labour Party will take action to cap the cost of credit when in government.

It is in the context of this commitment by the Labour Party that our activists listen to the announcements by the FCA yesterday.  While Movement for Change welcomes the FCA’s response to the concerns raised by the Sharkstoppers campaign – affordability checks and limiting loan roll-overs and automatic repayment withdrawals – it is clear that a cap on the total cost of credit, the only way of winning financial security for those in times of need, is currently off the table.

This morning the FCA tweeted ‘Government gave us power to cap total cost of credit.  We recognise this is a useful power’; but then ‘Government research suggests cap could have unintended adverse consumer impact.  We’ll look at issues once take over in April’.  The FCA’s hands are clearly tied by their political masters who are unwilling to recognise the extent of the problems facing our communities.  But with Jo Swinson MP describing a cap on the cost of credit as a ‘warm fuzzy feeling’, this hardly comes as surprise.

Last November we celebrated when the government announced that the new FCA would have the power to cap the cost of credit.  That announcement now seems like a bad joke.  Power without action is no power at all.

But our movement now has the momentum to make sure the Sharkstoppers campaign will be a success.  Every day our numbers grow, rallied by the honesty and courage of the activists like Serai and Trina whose lives have been so badly affected by Legal Loan Sharks.  And when a cap on the cost of credit is introduced, we will look back and see that it was the Labour Movement’s ability to organise communities that achieved the change we so need right now.

James Scott is a Community Organiser at Movement for Change