Payday loan companies: majority of Lib Dems say they’re unethical, with 85% wanting limits on their charges

Lib Dem Voice has polled our members-only forum  to discover what Lib Dem members think of various political issues, the Coalition, and the performance of key party figures. Some 750 party members responded – thank you – and we’re publishing the full results.

By 56% to 30%, Lib Dems DISAGREE that payday loan companies offer a useful service

For each one please say if you agree or disagree with the statement…
… Payday loans companies offer a useful service

    3% – Strongly Agree
    27% – Agree
    Total agree = 30%
    26% – Disagree
    30% – Strongly Disagree
    Total disagree = 56%
    13% – Neither agree nor disagree
    1% – Don’t know

65% say payday loan companies are unethical – just 17% disagree

… Payday loans companies are unethical.

    32% – Strongly Agree
    33% – Agree
    Total agree = 65%
    11% – Disagree
    6% – Strongly Disagree
    Total disagree = 17%
    Neither agree nor disagree
    Don’t know

58% say people who take out payday loans unable to decide for themselves if the terms are attractive or not

… The people who take out payday loans are in the main able to decide for themselves whether the terms are attractive or not.

    2% – Strongly Agree
    20% – Agree
    Total agree = 22%
    37% – Disagree
    21% – Strongly Disagree
    Total disagree = 58%
    16% – Neither agree nor disagree
    3% – Don’t know

85% want limits on amount payday loan companies can charge

… Limits should be introduced on the amount that payday loans companies can charge.

    57% – Strongly Agree
    28% – Agree
    Total agree = 85%
    6% – Disagree
    3% – Strongly Disagree
    Total disagree = 9%
    Neither agree nor disagree
    Don’t know
  • 1,500 Lib Dem paid-up party members are registered with LibDemVoice.org. 749 responded to the latest survey, which was conducted between 14th and 18th December.
  • Please note: we make no claims that the survey is fully representative of the Lib Dem membership as a whole. However, LibDemVoice.org’s surveys are the largest independent samples of the views of Lib Dem members across the country, and have in the past offered accurate guides to what party members think.
  • For further information on the reliability/credibility of our surveys, please refer to FAQs: Are the Liberal Democrat Voice surveys of party members accurate? and polling expert Anthony Wells’ verdict, On that poll of Lib Dem members.
  • The full archive of our members’ surveys can be viewed at www.libdemvoice.org/category/ldv-members-poll
  • * Stephen was Editor (and Co-Editor) of Liberal Democrat Voice from 2007 to 2015, and writes at The Collected Stephen Tall.

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    20 Comments

    • interesting differentials. Am happy to tell people how I voted: useful service Yes, unethical Yes, people capable of deciding for themselves Yes, should be regulated Yes.

      I see no contradiction in those answers. Payday loans COULD be a useful service and perhaps possibly ARE for some people. However add the companies are run at the moment they are unethical and exploitative.

      The third question is the one where I think the wording was crucial to my answer. Poor people are not STUPID, they are CAPABLE of deciding, they are just trapped, and when you need to eat NOW the consideration of interest rates etc takes a back seat. And of course the vast majority of payday loans are used for essentials. If it had been worded otherwise I might have voted with the majority.

      I voted Yes to regulation on the simple expedient that it’s the lesser of two evils. I’d rather we sorted out the extreme poverty that makes regulation necessary, but I’m under no illusions that that is at all likely.

    • Colin yes, I grasp that, but if you’re hungry now the prospect of starving is more immediate and pressing than interest charges which will apply in a month.

    • Andrew Emmerson 30th Dec '13 - 9:45am

      It hurts my liberal soul that so many Lib Dems believe people who access pay day loans are too stupid to decide whether they’re getting a good deal or not.

    • Peter Watson 30th Dec '13 - 10:15am

      I agree with comments above, and it strikes me that “58% say people who take out payday loans unable to decide for themselves if the terms are attractive or not” and “By 56% to 30%, Lib Dems DISAGREE that payday loan companies offer a useful service” says more about Lib Dems than it does about payday lenders. It suggests a party whose members have a condescending attitude towards those who need such loans, and who cannot comprehend what it is like to be so short of money that such a loan is useful.
      For what it is worth, I would be much happier if more members had answered in the same way as Jennie.

    • Jennie, Yes, I get that. But by restructuring short term loan repayments over a few months, rather than the current rolling over of one month loans, you cut the interest cost by perhaps two thirds. The choice then is not between going hungry and a massive loan in the future, but between going hungry and a manageable loan that won’t balloon out of proportion.

    • Paul in Twickenham 30th Dec '13 - 10:43am

      The context sensitive pop up on this page has given me an ad for. .. A loan company! They are offering to loan me £850 to buy a car with 78 weekly repayments of £57.68 for a total charge of £2471.68 at an APR of 491.36% secured against the log book of the car. In what parallel universe is this not usury?

    • Paul in Twickenham 30th Dec '13 - 10:53am

      Actually as I posted my previous message I realised that the multiplication is wrong as 78 X 57.68 is 4500. But that’s what appears on my mobile – the arithmetic in their “representative example” is completely wrong. However on the desktop website it gets the multiplication right and it’s £31.69 for 78 weeks totalling £2471.82. Still 491% APR, still secured against the log book.

    • The problem is that if we say that most users of these loans either cant or wont “decide for themselves” then we are reclassifying a big chunk of the adult population as children. Thats fine for Labour types like Peter Watson but is it acceptable for Liberals ?

    • Eddie Sammon 30th Dec '13 - 12:37pm

      Government imposed interest rate caps will just limit competition. It’s not the liberal way to do things and if I don’t want price caps on my business then I shouldn’t ask for them elsewhere. I don’t like the precedent it sets. Lower interest will also encourage people to take out more debt.

    • I suspect this says as much about the perspective of the members polled as it does about those using these services!
      An interesting question might have been ‘have you ever had to obtain a payday loan’.
      There is always a danger in these matters of patronising or iconising the desperately poor, the only people who don’t are probably in that category themselves. Some will make poor decisions, some will not.

    • Peter Watson 30th Dec '13 - 1:30pm

      @paul barker “Thats fine for Labour types like Peter Watson but is it acceptable for Liberals ?”
      I’m not sure what you’re saying here, so perhaps you misread my comment. I agree with Jennie, and apparently I disagree with the majority of Lib Dems who seem to believe condescendingly that the poor can’t decide for themselves. It is the Lib Dem types who are “reclassifying a big chunk of the adult population as children”.

    • Paul Robinson 30th Dec '13 - 2:58pm

      @johnmc: As a lot of the comments seem to be regarding whether we are being condescending, perhaps a good question would be “Do you personally know anyone who has taken out a pay day loan”.
      A study published today (http://moneyfacts.co.uk/news/loans/payday-loan-uses-revealed-amid-calls-to-ban-adverts/) seems to show that some people are using pay day loans to fund a night out drinking, or to pay a mobile phone bill; not quite the use of PDL that most people expect!
      It’s heart breaking to think that some people see these as their only choice. Good comment piece in the Guardian: http://www.theguardian.com/commentisfree/2013/dec/17/why-wonga-exist-no-one-on-left-asks.

    • Eddie Sammon 30th Dec '13 - 4:43pm

      If payday loan companies are unethical then are supermarkets too? Perhaps this also illustrates the problems of shoving membership down people’s throats rather than trying to create a movement with a broadly clear vision for government.

    • Peter Watson 30th Dec '13 - 5:40pm

      @Geoffrey Payne
      “I strongly object to this guilt trip argument that if I think that Pay Day Loan companies are ripping people off that I am blaming the victims for being stupid.”
      I think it is entirely consistent to believe that Pay Day loan companies are ripping off people who are not stupid. The link you provide shows most people believe these lenders take advantage of the “vulnerable” and were pretty ambivalent about whether or not “Customers can judge if the terms are attractive”. This is not the same as the survey above in which 58% of Lib Dem LDV members (or nett of 36% compared with 4% on the yougov page) believe that the borrowers cannot decide for themselves whether or not the terms of the loan are attractive. I believe that pay day borrowers would be capable of identifying more “attractive” alternatives if they had choices.
      “I do think that that if you have a low understanding of mathematics, then you may well not understand interest and why Pay Day Loans are a rip off. I believe these companies exploit this by the way they advertise their services. They show benefits of getting a loan, and not the price you pay for having one”
      I don’t entirely agree with this. A quick look at a couple of lenders’ sites shows they use examples or calculators to make it clear that e.g. if I borrow £200 for 28 days I will pay back £250. This is much more straightforward and meaningful than bandying about a.p.r. figures of 1700% and does not require much maths.
      I do not think that those borrowing from payday lenders are stupid, and I believe many or most know exactly what they are signing up to as far as the loan is concerned. It is other parts of their lives that can cause the problems, whether that is poor choices (e.g. getting into debt over things that some of us would not consider vital) or bad luck (e.g. circumstances mean that another emergency arises or pay day does not come).
      I do feel that people need some sort of protection, but I do not know what needs to be done. It seems much more complicated than simply regulating the loans companies, but that might be a good start, especially with regards to advertising. Would restricting this source of cash drive desperate people to worse situations? Would tolerating the status quo or reducing the costs/risks of borrowing mean that bad habits (for want of a better expression) become engrained?

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