The City regulator, from its perch in Canary Wharf, where many of its senior executive earn more than the prime minister, had read its tablet like Moses, issuing its latest edict that short-term borrowers must not have to repay more than twice the amount they borrow.
It is a flawed piece of policymaking which does not take into consideration the reality of short-term borrowing on the ground.
But first, let us dismiss one or two myths: the banks have cleverly ‘outsourced’ the high-risk part of its lending to the payday lenders, while at the same time investing in the businesses - that, it is fair to say, should be of major concern to the regulator.
Second, unauthorised bank overdrafts are disproportionately more expensive than short-term loans and, if the would-be borrower were to ask the bank for a loan he would almost certainly be laughed out of the bank.
People who borrow from payday lenders tend to be those who are excluded from the conventional financial community; they are likely to be on benefits or be low or moderately paid; to be single parents (in the main a mother), living in rented accommodation, and generally urgently in need for a short-term loan to feed their children, put money in the extortionate pre-paid electricity, owe a catalogue company or gas meter or having some gangster with a killer dog knocking on their door asking for payment on a previous loan.
These are people who do not care if a payday lender charges rates of 5000 per cent a day as long as they could get the money on the spot.
The introduction of middle class affordability interviews, job references and such are totally irrelevant.
Equally, another big market for short-term loans are young people, mainly men, who want to cash a cheque or borrow money to go out on the tiles with their mates just before payday.
As a demographic, these are not people with the discipline to say if they do not have any money stay in and watch television, or in the jargon of sociology, defer gratification.
These are the very people the leisure industry was invented for; when we talk about consumers it is the group – generations X and Y – who live beyond their means and think of no tomorrow.
Educating this group, or in the language of so-called behavioural finance, getting them to change their behaviours, is not that simple.
It is almost as difficult as getting well salaried policymakers to sit down and think ‘outside the box’ on ways and means of integrating the marginalised back in to the mainstream of society.
But then again that will not go down well with the mass-circulation press and politicians looking to score points with their constituents.
