Most of it concentrated on mis-selling of products, illegal lending, loan sharks and short term lenders in the pay day loan sector – most recently highlighted by the Wonga debacle.
Wonga should not have received any praise, or in my view equity investment, for its activities when lending at APRs of over 6000%. Clearly though, there was a gap in the market to be served. The concern must be that so many people were prepared to borrow at those rates. At least now some lucky ones have seen their debts written off.
It would appear that in the consumer market if someone can come up with a quick solution with little in the way of questioning there are people willing to borrow. But what of the business market?
In this world there have also been many high-profile issues, including again mis-selling PPI and exchange/interest rate swaps - nearly all in the domain of the banks. And as the banks have moved away from supporting small businesses - for many reasons, including regulatory issues, I am concerned that many finance directors and owner-managers are being as tempted as consumers by offers of quick finance, without too many questions asked.
We have already seen many examples of individuals using their personal credit cards and personal loans from money shops to support their businesses, and there is now an emerging number of alternative providers of finance who do not appear to be in the responsible and ethical lending world.
So my advice to businesses is: BORROWER BEWARE. If the answer “YES” comes quickly and without questioning, the probability is that the funds are arriving at far too high a price, or with some potentially sticky strings attached.
Dr Steve Walker is Chief Executive of ART (Aston Reinvestment Trust - www.reinvest.co.uk ) He has been an advisor to the Government and champion of access to finance for enterprise throughout the UK and overseas for many years.
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