Deborah Orr has hit the nail on the head in her piece about payday loans and the abject failure of the banks in today's Guardian.
During the double-dip recession, as the cost of living rises, wages freeze and the concept of the “under-employed” drastically increases, the payday lending industry maximises its profit margins at the expense of a squeezed majority - and is facilitated by a risk averse banking sector determined to sit on its capital rather than lend to more individuals and small businesses.
But Orr raises another very important point that deserves some attention by policymakers today – that is, the duty to provide legal means for a popular challenge against banks who fail them. Banks themselves juggle an inharmonious role: of trying to please the public at the same time as its shareholders, but it's usually the former who suffer the most.
Government helping small businesses, at a time when there is subdued growth, to sue banks where they prove ineffective and open the door for the likes of Wonga to swoop in with their new high cost business loans, would start to push banks in the right direction and iron out some major financial anomalies in the UK today.
Carl is the author of the forthcoming Loan sharks (tbp Searching Finance, September 2012).