Express & Star comment: A society built on debt

From paying on the never never to pay-day loans, from loan sharks to buy now pay later credit agreements, too often people buy things that they do not need with the intention of paying for them further down the line.

Not all such loanees can be characterised thus, of course. There is huge division in society between rich and poor, between the haves and the have-nots. Covid has reminded us how vulnerable many people are, where daily decisions are made on whether to pay the rent or feed the kids, whether to dodge the council tax or let the gas or electricity company disconnect the supply.

There are some essential, ethical ways to borrow money in the short term. There is also a proven need and desire for such products as pay as you go, which can be a very useful tool to help people buy goods.

It is important to remember, however, that when payments fall behind, trouble can come. The entry of the Financial Conduct Authority to look at BNPL schemes is welcome.

Its review, however, is part of a bigger problem. We are a society built on debt. That can be fine when interest rates are low, but when they inevitably rise in future there will be millions struggling to pay their mortgage or defaulting on loan payments. The banking crisis a decade ago was built on unsustainable debt and we are in danger of falling into the same trap again.

As individuals, we have a small number of basic needs: food, water, shelter, warmth. Beyond such simple elements, we must resist the temptation to buy goods that we do not need. And regulators must bare their teeth when lenders offer shoppers an unrealistic route to buying goods that they neither require nor can afford. Expensive borrowing is never the answer. Managing scarce resources is far more important.

It is important that the regulator saves people from their worst habits.