You’re no doubt a hard working person.
Likely you take advantage of the societal norms we all enjoy, such as bank loans and credit cards, but you probably haven’t stopped much to think about them. Instead, like the rest of us, you’ve worked from the time you graduated university, or before for those who are without degrees. Your money has been spent on the things the world thought you needed to be comfortable and the measure of that comfort has been every other person around you who has had something you did not.
You’ve also no doubt grown up trusting in those same societal norms and benefits we enjoy in the first world. Things like pensions, working electricity, clean water and social care are all reasonable expectations for any of us. We don’t consider the homeless overly much, as our tax dollars go to support them and we expect that there are programs in place to make sure those less fortunate than us get a leg up. We also place a lot of faith in our educational systems – but that faith is too often misplaced. Our financial education is a shambles, but then it’s not good in any other first world country either.
In a society where almost everything we do is regulated, and we can’t even light up a cigarette unless we’re in places where it’s allowed, our finances remain largely unregulated. Credit cards are one of the worst of these financial leniencies because they hurt so many people - with essentially zero oversight, but bank overdrafts are actually even more damaging. In fact, they’re the worst short term cash loan option in the market. They just aren’t used by as many people. Sadly, instead of regulating those sorts of loans, our MPs choose to crack down on issues that really aren’t even a worry for most of us, targeting fringe loans in favour of bank overdrafts, when it’s estimated that less than 2pc of us have ever even used a payday loan. It’s just this sort of thing that leaves the financially ignorant (which is far too many well meaning people), believing that they’re somehow protected when it comes to finances and the banks they choose to trust.
The truth is, we’re not protected at all.
There are supposed to be financial regulations in place to protect those who don’t have the financial knowledge or expertise to pierce the illusions they create, but they are a farce. As a result we all sit back with a false sense of security. This is because banks are businesses. They aren’t there to help us. Instead they want to make money. Their job is to give us a false sense of security so they can make that money off our backs. Most of the time banks won’t even tell us about the best ways we could save money. In any other regulated business that sort of thing would be criminal, but it’s common practice for finance companies. So while they are all technically licensed and regulated, the products they sell are largely unlicensed and unregulated, despite common belief to the contrary.
That’s why credit cards are such a problem. A person can quite literally destroy their life and the lives of their loved ones with a few credit cards. No one will particularly care, and there is no real relief for them or their children if such a thing should happen. They either have to pay up, or their records with the credit reporting agencies get destroyed, and with those reports, their entire life. They will be unable to easily find a home to rent, and may even be denied employment as a result. People don’t think about this though. We’re taught that managing our finances is something we need to do, much like we’re taught to wash ourselves. Except, finance is infinitely more complex than scrubbing your bum clean, and besides, nearly every other aspect of our lives is regulated and managed by the government. Why shouldn’t finance be regulated and managed properly too? For instance, there are health regulations, driving regulations, educational regulations, gun regulations, and even food service regulations – but zero real credit card regulations and few meaningful loan regulations.
As an example, if you go to the doctor for treatment, that doctor is held to a very strict set of standards. Should you receive bad care, or advice that destroys your life, there are legal remedies you can seek. The doctor and even the hospital or practice where that doctor works will absolutely be held accountable. However, if you apply for a mortgage and don’t ask the right questions, there is almost nothing you can do to change things once you’ve signed the papers. Even though a supposedly regulated and licensed financial institution assisted you in making that decision, you’re the one ultimately responsible for the burden of it. Yet, should you take a medicine recommended by your doctor and have problems, you can seek damages from the doctor. How is that a fair measure of regulation, when both are equally destructive to our lives and the lives of those who depend on us?
Financial regulation is an illusion.
The fact is that our credit facilities are actually very much unregulated. We are taught that paying interest on almost everything we do is normal, where the household debt in the UK is 115pc of the average salary, at a staggering £28,916 debt, versus £25,081 salary and bonuses. How is it that as a country we’ve let ourselves slide into such a financial disaster, or worse, that we’ve let our elected leaders and representatives to allow this abhorrent practice continue?
Well, we’ve let it continue because of marketing. We’re taught that we need to meet certain standards, and the banks we trust with our financial lives are too happy to extend us credit after credit, forcing us to pay interest on almost everything we do. We’re shown credit card and loan adverts with happy people in nice homes, driving great cars, and living the life. Then, when we look at our neighbours, we see them doing the same things we are, and just assume that everything is ok – but it isn’t.
Things are not well in the UK, and they are getting worse daily. But like a slow leak in a large boat, those of us at the top don’t notice the ship sinking. We need to take notice though, because when the ship goes down, we go with it. Parliament has already shown that they lack the strength Iceland had when rejecting the financial abuses of businesses and bankers. Instead our MPs consistently vote to bail out banks and business while paying exorbitant excesses at the expense of the taxpayer.
This year, if you make any New Year’s resolution, it should be to wake up and see what’s wrong with the financial world of the UK. Something needs to change, because we’ve reached a tipping point where we’re paying credit on the very pants we wear. That’s absurd, yet it’s become a standard by which we not only live, but also measure our success and ourselves.
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