Planning application for Money Shop at 59 Sydenham Road

[Eagle]

I believe our good freind Mr Micawber said some very sensible words
If people had lived withing their means the last decade or so we would be in far less of a problem.

[Tim Lund]

I believe our good freind Mr Micawber said some very sensible words
If people had lived withing their means the last decade or so we would be in far less of a problem.

I agree, but the economy would still benefit from well functioning credit markets.

I meant to add that those on the other side of the balance sheet, with cash earning virtually nothing in the bank, could consider putting some of it with the Credit Union, which is FSA regulated, which brings with it a deposit guarantee (I need to check this, but I'm fairly sure). This would also be a good way of protecting their less fortunate fellow citizens as successfully campaigning against planning permission for The Money Shop

[Eagle]

I was reading last week that The French economy was recovering quicker than hours because they are not saddled with debt

1. I understand all credit cards must be paid in full each month.

2. Impossible to remortgage a property.

Why oh why did our Government not show such wise caution.

[Hill Dweller]

I don't get the sanctimonious opposition to decent (verrrrrry big qualification there) credit.

If someone is really earning enough, in secure employment, to secure a mortgage or a credit card that they can cope with, why should they or their family be denied something now - while it will most greatly benefit their children?

With the same idea in mind, why should a Govt (if able to access cheap international loans) not be credited/applauded for investing in today's children instead of skipping age groups on the oh-so-fake yadder about 'lending'. It's Snatcher all over again (and like the age group that were at school through the 80s/early 90s, many in hovel conditions).

How can THIS govt receive approval from anyone at all? They claim to have increased funding for Sure Start but in fact they have not ring-fenced those allocations so councils can spend them on what they wish. It's treated like a meaningless label.

My family did not and are not likely to benefit from Sure Start but I have enjoyed seeing the outcomes for those that have.

---------------

Back to topic; Credit Union 26+%pa interest when BoE rate is 0.5%.
Money Shop - I daresay its interest rate is similar to Bright House, which I heard the other day is sold for short terms at 20% per month but that becomes 240% p.a. for their UNsecured majority of customers who cannot/will not clear as contracted.
(Edit: OMG apparently they also only sell their loans alongside understandably expensive insurance policies.)

How many of these sharks exist mostly to ensnare those with little security and/or on benefits?


.

[Tim Lund]

Credit Union 26+%pa interest when BoE rate is 0.5%.
Money Shop - I daresay its interest rate is similar to Bright House, which I heard the other day is sold for short terms at 20% per month but that becomes 240% p.a. for their UNsecured majority of customers who cannot/will not clear as contracted.
(Edit: OMG apparently they also only sell their loans alongside understandably expensive insurance policies.)

How many of these sharks exist mostly to ensnare those with little security and/or on benefits?

The difference between the interest it charges borrowers and what it pays savers / depositors is what a credit business has to pay its costs from. With unsecured personal lending, these will be high, because it is very much a people business, and 26% is not unreasonable. Lending on the security of a mortgage once seemed to eliminate needing to understand the client, since lenders believed there was a straight-forward way to get their money back. Now, of course, they are not so sure, unless there's a big deposit to provide margin.

Yes - it probably would be better not to have to borrow at 26%, but even in the best run households there may be unanticipated cash needs. Being a member of a Credit Union means such emergencies can be more easily and more cheaply dealt with.

And I don't know how many such sharks there are, but there are enough.

[Hill Dweller]

I understand the risks these shark lenders are taking and I also understand the short-term desperate needs that some poor must have, I've quoted a particular example much earlier in the thread and there are many more.

I still think it's being over-generous to assume that these lenders must suffer such a high proportion of defaulters that makes 26% defensible by anyone..... particularly, nope par.tick.ularly , as so much of their take must actually be from benefits.

I'm sure they don't really fail to get much back; that 26% is used to pay bailiffs, people are paying for their own evictions.


Sooooo, what I'd like to see covering their windows?
Big notices advising their tactics and letting the people that will pay back PDQ know that they are subsidising (edit: the strong-arm tactics that will be used on) those that can't.
Big notices letting those on benefits know they can get loans from DSS/DWP etc.

At least Credit Unions have a more acceptable look and I've dared to hope that the use of district names means they are monitored locally?

[blue&whitewizard1991]

Hill dweller

Never let the facts get in the way of a 'guess' or 'assumption'

You may want to look at the financial accounts posted by Lewisham Plus Credit Union on their website to show how financially well run it is as an organisation and despite relying heavily on a dedicated volunteering presence, still have a job balancing the books.

You will also see why they charge the interest rates they do. Which, by the way start at 12.7%apr and only rise to 26%apr for those without any savings history, previous repayment relationship (effectively those who have recently joined).

Legitimate Reasons for Credit Unions to charge the rates they do:

- Typical CU clients, have been blacklined by banks and will never be lent to at high street rates. This is partly because some present too high a default risk, but mainly because the small amounts they often wish to borrow, mean that the admin costs associated with setting up a small loan and offering small, but frequent changes to lending and/or flexibility to repayment schedule proves cost prohibitive for banks. This type of small but flexible lending is the bread and butter of credit unions, as it responds directly to the needs of those financially vulnerable. The admin costs that banks shy away from are absorbed by Credit Unions;
- CUs actually have a face to face relationship with their clients, rather like banks and building societies used to the descions they make on borrowing are based on interviews and checks on affordability - not simply plugging a postcode of NI number into a computer. This means decesions are more rigorous, and costly but importantly, fairer.
- CUs have considerable success controlling the arrears rate and bad debt write off, despite often working with individuals more likley to default. Managing this requires significant investment in strong credit control functions - also not cheap, as it requires professional expertise.
- As mutual organisations, with democratic accounatbility there are significant compliance costs, despite the small community scale which Credit Unions operate.
- despite being democratic, local, and equitable financial institutions CUs have been chronically underinvested in by successive governments, so often rely on inefficient systems. Many well run CUs would love to embrace new more efficient systems and pass on savings to customers but they dont have the cash.

And finally, for many people CUs are used as savings vehicles - customers often benefit from dividend rates that significantly outperform banks current account rates, Lewisham for example have paid 1-2% in the past couple of years and in previous years more.

All this fantatsic service needs to be paid for somehow......

Oh... and ...I would be surprised if more than a handful of CUs pass on debt to baliffs on a reglar basis. I dont know this for sure however. But I do know that they would sell bad debt at a loss (as this makes basic economic sense).

[Hill Dweller]

by blue&whitewizard1991 » 14 Feb 2011 20:47
Hill dweller
Never let the facts get in the way of a 'guess' or 'assumption'

------------------

Apparently you've been moved to make your first post in a couple of months, why let your emotions push you about so .... actually to run to the defence of a wolf in sheeps' clothing?

That clothing would be the 'respectability' conferred on an organisation by its use of an area's name; it implied to me that there was some kind of council connection.

You might have (or might not have) noticed that the main target of the thread is REAL sharks, Money Shop, Cash Converters and my own fave hates: Bright House and Western Union (I've not yet mentioned Giro cashers but feel free to assume I should have). That's if YOU can manage to make an accurate assumption.

You might have (or might not have) read the whole thread and acquired some balance about what each earlier contributor has posted.

Interest on savings?
Will I get interest on my savings?
Credit Unions pay a dividend rather than interest.
What's the difference? - the dividend is not guaranteed. A credit union will pay a dividend if it has a surplus after all running costs have been paid.

[blue&whitewizard1991]

Apologies if you felt i was being hostile, but it does rile me to think that people seriously consider Credit Unions to be part of the problem and not part of the solution.

I agree wholeheartedly with your earlier thread on access to credit, and believe it or not, I was able to recognise that the main focus of your thread was other predatory lenders 'money shop et al' . However, my objection is with lumping credit unions into the same group.

I dont comment on the message board regularly, but was prompted to respond to an issue that i feel i have some value to add, and because I felt the discussion was in danger of inaccurately representing the Credit Union movement.

Credit Unions do not intend to operate in 'sheeps clothing' and gain 'respectability' by using an area's name. Most CUs, Lewisham Plus included, have place names in their title bacuse it refers to the 'common bond' to which all members must adhere to and which the FSA upholds as a regulatory requirement. The majority of CUs have a common bond that corresponds to living, working or studying in a particular geographic area (typically a local authority boundary). In the case of Lewisham Plus the 'common bond' has recently extended to include both Lewisham and Bromley boroughs, having previously just covered the Lewisham borough.

There is no need for a well run Credit Union to try and gain respectability through surreptitious methods. In the case of Lewisham Plus, they have enough legitamcy and credibility to be funded by local authorities, social landlords and the Department for Work and Pensions who recognise the value of having a strong not for profit and locally sensitive lender in the borough.

You're right to pull me up on a semantic error - dividend isnt the same as interest and isnt guaranteed. However, charging sensible lending rates that recognise full cost, and price risk properly, will generally mean that a CU will generate a surplus and can pay decent levels of dividend to savers

[Hill Dweller]

I do agree that the time that CUs give to their clients could be of real benefit, especially as so many of us are clueless about credit, compound interest, default fees etc. At a time when lots of us agree that it would be brilliant for 4th/5th/6th Formers to be taught something about financials we have to be aware that there are also whole groups of adults that are ripe for being ripped off and so the basic training supplied by the CU teams doing face2face with clients is fabulous.

My concern about their 26% rate is from info of two years ago btw ... when BoE rate was 0.5% (thanks to the actions taken by Brown & Darling).
Given that at that time 'normal' credit card lenders were charging 16% or so and are now putting their rates up to 24-30% I can't help wondering how high CUs' rates will go.

The Rowntree Foundation did a report a few years ago, it was pretty worrying so I hope things have improved since then. The very fact that the unions are autonomous and therefore more subject to a manager's whims than would be possible in a 'normal' bank makes them an unknowable quantity (as a national whole).

I wasn't picking you up on semantics! I should have made it clear that the last group of lines of my last post was pasted from another internet document and added that its ending ...... 'if it has a surplus after all running costs have been paid'...... is another unknowable.

[Tim Lund]

I do agree that the time that CUs give to their clients could be of real benefit, especially as so many of us are clueless about credit, compound interest, default fees etc. At a time when lots of us agree that it would be brilliant for 4th/5th/6th Formers to be taught something about financials we have to be aware that there are also whole groups of adults that are ripe for being ripped off and so the basic training supplied by the CU teams doing face2face with clients is fabulous.

My concern about their 26% rate is from info of two years ago btw ... when BoE rate was 0.5% (thanks to the actions taken by Brown & Darling).
Given that at that time 'normal' credit card lenders were charging 16% or so and are now putting their rates up to 24-30% I can't help wondering how high CUs' rates will go.

The Rowntree Foundation did a report a few years ago, it was pretty worrying so I hope things have improved since then. The very fact that the unions are autonomous and therefore more subject to a manager's whims than would be possible in a 'normal' bank makes them an unknowable quantity (as a national whole).

I wasn't picking you up on semantics! I should have made it clear that the last group of lines of my last post was pasted from another internet document and added that its ending ...... 'if it has a surplus after all running costs have been paid'...... is another unknowable.

There's lots to agree with in this from HD, not only about the social value of person time talking about financial matters, but also the need of CUs, like any other organisation, for proper governance, accountability, etc. But I really do think he (she?) has got the wrong end of the stick on their interest rates. As the highly qualified wizard writes, 26% is just a maximum rate, which is less, on my experience, that the APR on monthly payment terms from a perfectly respectable insurance company (Endsleigh, as it happens).

[admin]

I have split this thread as it got terrribly personal and hence off topic.

Please remember - no personal abuse in the Town Hall and we should try and be welcoming to new and infrequent posters. Each is of equal value - well at least until proven otherwise.

So Money Shop stuff here please. If you want to be abusive then don't do it here. It will get deleted. If you really need to continue then go down the Town Pub ...

Admin