Cakes and “Awesomestow”

This weekend Money Saving Movement (MSM) placed itself back on the streets (well actually on a lovely piece of grass) in Walthamstow (Or “Awesomestow” as they like to call it). We have been itching to get back there and talk to the lovely people of this diverse area for a while as Walthamstow really interests us.

Walthamstow has been home to a number of research visits for MSM. It sits within the Borough of Waltham Forest which has some of the highest concentrations of deprivation within the U.K. Its High Street is notable for its long market (apparently the longest in Europe). The high street is busy with high cost lenders and high cost retailers, unfortunately. Both of which MSM are not fond of. However the people of”Awesomestow” are brilliant and we found them great fun to talk to. This might have been helped by the Free Cake, more about that in a bit.

The objective of this trip was to spend some more time talking to ordinary people about how we might design an alternative social enterprise service to high cost rent to buy retailers. So when we arrived we were all prepared with a pre-planned discussion structure, gazebo and the all important MSM banner. Most importantly of all (well maybe) we were also offering Free Cake supplied by the lovely Dee.

I’m pleased to say that we found out A LOT. Here is a quick snapshot –

  • People continue to use rent to buy retailers.
  • People are also paying for warranties to cover themselves in the eventuality that something goes wrong with an appliance.
  • People like brands that have a solid reputation.
  • People would purchase from a social enterprise.

It was great to hear people’s opinions and the data provided us with plenty to think about. For me it underlined the importance of “getting out of the office”. I wonder how much emphasis is put on this within business. I hear plenty of people talk about it but I struggle to find actual examples. It is core to our approach at MSM and we are looking forward to doing lots more of it.

Have a great week everyone.


James Perkins


Money Saving Movement  MSM in Awesomestow 1MSM in Awesomestow 2


Massive Payout Exposes Ugly Underbelly of Payday Loans Collections

Debt campaigners outside St. Pauls in 2011 - Photo credit acute_tomato

Debt campaigners outside St. Pauls in 2011 – Photo credit acute_tomato

Payday loans provider Wonga was hit with a whopping £2.6m compensation payout yesterday, as the market leader’s carefully constructed squeaky-clean image was blown wide open as a fallacy.

Far from offering “completely transparent charges” as claimed on its website, the company shouldered the largest ever compensation payout from a UK payday lender because of its debt-collection policies, where letters were sent to borrowers threatening legal action from made-up law firms. In some cases Wonga also added extra charges to its customers for ‘administration fees’ of the non-existent law firms.

Wonga offered a begrudging apology to 45,000 affected customers for its “historical” actions and “system errors”, and claimed that it would be “contacting anyone affected proactively”. This stance was somewhat undermined, however, by the company consistently ignoring complaints and criticism from members of the press, as well as from Labour MP and anti-payday loans campaigner Stella Creasey on Twitter.

The payday loans sector has long come under criticism for its sky-high rates and ability to trap people into spirals of problem debt, but Wonga has tried to cultivate the image that it is the responsible and trustworthy exception that bucks the trend. By looking at Wonga’s collections policy, we can see this for the marketing ploy that it is – usurious rates still push people into poverty, particularly when coupled with bullying tactics and unorthodox collection practices that border on harassment.

Wonga is by no means the only problem-debt lender that pursues dodgy collection practices though. Indeed, an entire industry of doorstep and high-street lenders has cropped up since the recession, who provide credit to those who generally can’t get it elsewhere. With such a gap in provision for the financially excluded, lenders are able to take advantage by charging such high rates, and many will go to extreme lengths to collect these burdensome debts.

Take Brighthouse for example, the market leader in selling household essentials on high-interest credit. This “rent-to-buy” model can be appealing because it offers people the chance to purchase items without the upfront cost, paying instead on weekly repayment plans. By combining high interest rates with inflated prices, however, customers often end up paying 2 or even 3 times the value of the products – another egregious example of the poverty premium in action.

To keep clawing in these repayments, Brighthouse has developed an unorthodox method of collection that relies on the peer pressure of social networks. At the point of lending the store takes the phone numbers of 5 friends of the borrower – and then repeatedly phones all of them if the person runs into any difficulty in paying them back.

This type of aggressive collection is extremely pernicious and damaging, because it causes unnecessary emotional and psychological harm not only to the borrower, but also to people who had nothing to do with the original purchase in the first place. In turn, this places increasing strain on the social and familial relationships that often go so far in supporting and sustaining those from lower income households, helping to accelerate social breakdown and spirals of poverty.

If Wonga’s payout showed that even the self-styled darling of the industry is still an ugly and manipulative lender, then it follows that a whole host of dubious practices continue to thrive within the sector. With companies such as Brighthouse continuing to develop imaginative and distressing collections policies, it’s more imperative than ever to remain vigilant to such exploitative practices – as well as to develop ethical and sustainable alternatives to such problem-debt provision.

Jetpacks, Grannies and Ladies on the Town – What Can We Learn from Payday Loans Marketing?

Payday Loans Neon

It might be unpopular to say this, but if the astronomical rise of payday loans companies since the financial crisis proves anything, its that these high-cost lenders are doing something right.

With eye-watering interest rates and half their profits derived from customers getting caught in spirals of debt, its difficult to see why anyone would want to get involved with a payday loans company – until you look at their competition.

Credit unions – touted as the best alternative to “compete Wonga out of business” – generally have terrible marketing that is un-engaging, sterile, and, frankly, boring. Their websites are often reams of text with simple, safe branding that fails to connect with a younger audience, and they rarely promote their payday loan alternatives.

Payday loans companies, by contrast, know their audience and are very effective at communicating with them. Our research on the Public Service Launchpad has shown that those most likely to turn to payday loans companies are under thirty years old, smart-phone and internet savvy, and are generally good with managing tight budgets, but can slip into trouble when an unexpected expense or a change in payment dates occurs.

With this insight, it becomes clearer to see why payday loans companies are growing so quickly. All the top short-term, high interest lenders have upbeat and engaging brands, with bright colours, feel-good imagery and a promise of better times to come. They boast about the speed and ease of getting a loan, as well as  underplaying the serious nature of taking out credit – sometimes to the point of breaking the law.

In addition, their social media accounts are often full of sporting brands, competitions and games – with many accounts not even mentioning or describing the loan services that they provide at all. These brands are loud, fun, and young, with cartoon-style illustration and mascots ranging from the familiar to the bizaare – including mad scientists riding jetpacks, cuddly grannies, and ladies out on the town.

The messaging is clear: its an easy, quick fix that will solve your problems, its not a big deal, and everybody’s doing it. In this way, payday loans companies target their branding consistently and accurately to attract their audience and to make them feel good about engaging with the brand – at least until the repayments are due, that is.

Banks, building societies and credit unions, by contrast, try to earn peoples trust by emphasising their expertise, reliability and authority in their branding – which often feels boring, slow and sterile. Is it any wonder, then, that payday loans can seem like a more attractive option?

If Money Saving Movement is about preventing people from slipping into debt, and to support them in navigating the cost of living crisis, then we need to be appealing to the same types of people that might consider using a payday lender.

In that case, the real question becomes not “Why are payday loans popular?”, but instead “What can we learn from their popularity that can be used for social good?”