Shackled Human Aspects of Predatory Money-Lending: How Vulnerability to Loan Sharks Arises In the United Kingdom

Abstract

Predatory money lending is no longer to be understood as a single issue of subprime mortgages in contemporary research. It also encompasses high-cost and consumer credit, spanning legal, parallel and illegal lenders, who operate in urban spaces and cyber platforms. These lenders, display parasitic behaviour and entice consumers into a financial web of stratification, where the opportunistic lender tuns the consumers into ‘cash cows’. This research shows how financial products can act as enabling factors for people with cash flow problems, who approach high-street lenders for mortgage loans, to enable them to climb the property ladder. However, when their circumstances change for unforeseen reasons, these financial products can act as excluders. Being in arrears of their mortgage can lead to high levels of marginalisation, collapse of property values, or an increase of crime in the neighbourhood; this can deter high-street institutions from establishing a branch, or they may even withdraw from this particular geographic location. Financial institutions and credit providers hold power over their consumers, due to their knowledge of financial products and familiarity with the market economy. If they withdraw from areas with limited information-technology provision, telephone banking or digital facilities such as video conferencing, this can push cash-stricken, vulnerable consumers into the web of parasitic, parallel or illegal money lenders. The increase of high-cost credit has seen a degree of fluctuation in the open urban space, since the 2007/8 crisis. Through Bourdieu’s concepts of field, culture and capital, this research brings the predatory nature of the financial sphere to the forefront of academic discourse. Two different case studies (the Welcome Centre and the Mortgage Centre) are employed to reflect on how the agents and financial institutions operate within a social and market space that encompasses the notion of the ‘field of power’ and ‘field of struggle’. Within this field of finance, market forces are operational, competing for financial capital and resources. The case studies show the emergence of stable (the Welcome Centre) and unstable fields (the Mortgage Centre), as observed through a government’ intervention which promoted the destructive nature of competition through the introduction of the FCA in 2014. This intervention impedes firms and financial institutions through stricter enforcement rules; this has resulted in companies slowly withdrawing or closing down in the high street, leaving a gap in the credit market. This research study is constructed in the form of a qualitative exploration of the construction of perceptions, identities of vulnerable consumers, and structures of predatory lending agents that operate within a field curbed by institutions that lack transparency and whose data are inaccessible to researchers and academia. The study addresses the nature of cultivated parasitic behaviour and redlining within this financial market, by reflecting upon two unconnected case studies within the social and financial field. Interviews on predatory lending were conducted with enforcement agents across the UK; results were evaluated following the Braun and Clarke’s guidance for thematic analysis. This qualitative research (Welcome Centre and Mortgage Centre) is a combination of interviews, observations, ethnographic and case studies, addressing questions identified by examining the social processes of exclusion from financial markets. Six main themes were formed: vulnerability; no access to mainstream credit; cultivated parasitic behaviour; poor economic skills; enforcement and prevention. The main significant indicators that were crucial to the research were: financial knowledge; institutional/financial stratification; social /financial marginalisation; parasitic behaviour; the underground economy; enforcement; and the capitals (social, cultural and economic). Finally, an assessment was made of the potential to stabilise the financial field of the predatory lending market, during crisis capitalism.