This week in the UK, regulator the Office of Fair Trading (OFT) reported on widespread irresponsible lending in the payday loan sector.
It gave the 50 main providers 12 weeks to change their practices or lose their licence.
The press was all over this story. One posted a graphic of how borrowing £300 for a couple of weeks on a credit card would cost around a fiver. Whereas a payday loan would cost you almost a hundred quid. Another listed typical payback percentages. Wonga were top of one particular such table with an astonishing APR of 4 214 %.
The industry were quick to fight back in the face of the media onslaught. No, they do not prey on the vulnerable, despite one in three loans getting “rolled over” and accumulating ever more charges, they claimed.
One such talking head I actually caught twice during Wednesday. He is Jason Gardiner of Friday Friday Dot Com. He was introduced both times as a self-styled “ethical lender”.
When asked his rates, he was at pains to point out that his firm charges £25 per £100, regardless of term (which he said can be anything from 1 day to a max of 35) and then freezes this upon any default.
Both times, he was pushed on the APR. Both times, this is how he answered;
One Seven Three Seven
No adjectives before or comment after. No word ‘percent’. And certainly nowhere near saying, “one thousand seven hundred and thirty seven”.
I noted the delivery at once.
I felt that he’d clearly put some thought into this unemotional answer.
I was astounded when his second interviewer, a professional negative-head and incredulous doubter, repeated the exact same phrase.
I recall once being told by a boss almost twenty years ago how ‘one day you have to tell the prospect the bad news’. Meaning price, when that price is ‘high’. It’s a real skill in how you get through this. Do you have your Friday Friday tactic?