New Year, New Wonga

The London Underground stops at around 1 in the morning for about four hours every night, to allow essential maintenance to be carried out to the network. The exception to this is New Year's Eve since 2003, when trains run throughout the night for free, to enable inebriated Londoners to travel home on a creaking, mostly-out-of-date transport system at a time of their choosing.

This year, in a spirit of free enterprise, Boris Johnson has announced that the free New Year's Eve travel will be sponsored by Wonga.com, a company specialising in short term loans at extortionate rates of APR, typically 2689%.

Fortunately, as they explain on their website, although they're legally obliged to print this in large letters on their adverts, it's nothing to worry about:

The larger the APR the more expensive a loan, right? Wrong. It’s a common perception, but with Wonga’s super-flexible approach to short term credit the opposite applies. This is a good indication of the potential for APR to mislead when trying to judge the cost of a short term loan.

The cost of a Wonga cash advance is determined by the amount of money borrowed and the number of days you need it for - the shorter the term, the less you’ll pay in interest and fees. Yet APR actually increases as the term and cost of a Wonga loan decreases. Confused? Well, as the loan period gets shorter, the more times you have to multiply and compound interest to make it into a theoretical annual figure!

Ah, so it's actually cheaper. How stupid of me.

There's a lot of instances on their website where Wonga soothes potential customers after asking them if they feel confused by all this financial speak.

With such short term credit APR has the potential to confuse, because it creates incomprehensible numbers compared to the norm. That’s why we also show the total amount repayable (TAR) before you apply. 

And not because you're obliged to by government legislation?

It's easy to imagine that the kind of people who'd use a short term loan service might not be particularly au fait with the ins and outs of financial terminology. It's also easy to imagine that such people would be easily convinced by a flash website which spends a lot of time authoritatively calming their fears about a subject they might be understandably concerned about.

Wonga state on their site:

We have a consumer credit licence from the Office of Fair Trading and are members of the Finance and Leasing Association.

A consumer credit licence isn't that hard to come by. But what's the Finance and Leasing Association? Sounds impressive.

The Finance & Leasing Association (FLA) is the UK’s leading trade association for the consumer credit, motor finance and asset finance sectors, and the largest organisation of its type in Europe.

Our members are banks, subsidiaries of banks and building societies, the finance arms of leading retailers and manufacturing companies and a range of independent firms.

It's a lobbying organisation for the financial industry.

Our mission is to represent our members’ interests to government, regulators, the European institutions, the media and the general public so as to improve the working environment in which our members do business.

What they do is to push the interests of what is an already vastly powerful section of industry, the financial sector, and do their best to reduce the costs on this sector. This is nothing to do with the Financial Services Authority, which has a slightly different purpose.

The Financial Services and Markets Act 2000 (FSMA) gives us four statutory objectives:

• market confidence - maintaining confidence in the financial system;
• financial stability - contributing to the protection and enhancement of the UK financial system
• consumer protection - securing the appropriate degree of protection for consumers; and
• the reduction of financial crime - reducing the extent to which it is possible for a business to be used for a purpose connected with financial crime.

It's not surprising, then, that the Conservatives want to get rid of it.

See what Wonga did there? They stated their membership of an association called the FLA, which sounds similar to the FSA, but has entirely different objectives. It would be very cynical to conclude that Wonga touted their membership of the FLA in the knowledge that most people visiting their site will be impressed by the big words and financey language.

Ultimately, while companies like this manage to avoid the tag "loan shark", mostly because their operations are legit, they share a target group in the part of society that is underpaid, undereducated, and unable to do anything about it, while all the time being bombarded with the messages from the consumer culture we all live in.

These companies have no interest in changing the structure of society. Why would they? It suits them for their customers to remain in poverty, with just enough income to justify the short term loans that companies like Wonga use to prey on them, but not enough to escape the grim cycle of loan-repayment-loan that keeps the loan companies in business.

It does London Underground and Boris Johnson no favours to be associated with these despicable people.

Clapham North's Thought for the Day

I couldn't find a great deal of references to Alan Ashley-Pitt on Google, apart from this quote, so I still have little idea who he is. I'll just give my opinion on the quote then.

When the first football international matches were played in the late 19th century, between England and Scotland, the accepted tactics in England were based on dribbling, and individual brilliance. A player would attempt to dribble upfield through the opposing defence, and when the ball was lost, one of the opposition would attempt the same feat, and this was generally how games progressed.

The Scots, on the other hand, had discovered the art of teamwork. Upon playing the English, once they had won the ball from an English player, they quickly moved the ball between each other, to bring an immediate threat to the English goal. Not to say that England had no success with their dribbling game, but the Scots were light years ahead, and the passing game grew to be favoured over the individualistic dribbling tactic.

We often like to think of ourselves as rugged individuals, ploughing our own furrow in the world. But our greatest triumphs come when we work together to achieve. In the way that a football team gets better results by working together than by toiling alone, cooperation is usually more productive than trying to do everything yourself.

Of course, history is full of visionaries, who had no need of help from others - Hannibal, Galileo, Maradona (just keeping the football analogy going!)

But these are the exception rather than the rule. Science could not function without the consensus derived from the replication of experiments, and the continuous testing of hypotheses. The wisdom of the crowd, with its combined knowledge and experience, will usually trump that of the individual.

There's the possibility that one person alone could be utterly wrong, but still stubbornly insists they're correct. Andrew Wakefield, for example, still contends that MMR causes autism, flying in the face of all scientific consensus. A man more alone you could hardly hope to find. His lonely journey may be taking him to places no-one has seen, but they're places no one should go.

So the man who follows the crowd may not have the satisfaction of the vindicated individual, but he benefits from the wisdom of others. The man who walks alone walks with no guide, into the forbidding darkness.


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Cool stuff on the Underground, Part 1

I really like this signal at Clapham North station. It's an original London Underground roundel, with a working colour light signal actually built into the structure. Not only that, I strongly suspect that when the new signalling system on the Northern Line goes live, it will become redundant, at which I will liberate it for my back garden. As long as they don't catch me carrying it up the escalator.

I only read one book, but it's a good book, don't you know

Clapham North's Thought of the Day.






Never heard of Harold Kushner, although I will look him up. I'd be more inclined to see life as a process of certainties being slowly eroded. Still, as long as his Good Book doesn't include stoning women to death for refusing to marry their rapist, that's fine with me.



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Clapham South's Insight of the Day

Looks like somebody's not been getting what they want out of a relationship. Hey, build a bridge and get over it!

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