05/08/2013 Newsnight Scotland

Tonight on Newsnight Scotland - what is going on at Ibrox? Walter Smith

quits. The supporters say they are concerned. The rest of us are

confused. We tried to make sense of the latest bout of blood letting at

the club will stop -- at the club. After full headlines for payday loan

companies the First Minister asks for a cap on the interest rates, but

couldn't be there are not enough of these companies?

Walter Smith resigned this afternoon as chairman of Rangers after a

weekend of rumours. At the heart of its troubles is a battle for control

of the club. It might be easy to understand if it was all about

business, politics, or even football. The problem seems to be

that it is a bit of all of that, and a bit more too. The fact that

Rangers collapsed last year as a business is part of the story, as is

the fact that base exceeded on the field. There is even the fact that

Rangers lost to Forfar athletic on Saturday. But the headlines this

week, presumably the headlines tomorrow, are all about straight and

dissent in the boardroom and amongst shareholders. And they are chiefly

to do with perceived personality clashes involving Walter Smith, Ally

McCoist, and Charles Green. Supporters organisations issued a

joint statement this evening admitting even they have little idea

what is going on. Walter Smith's resignation is a matter of deep

story about sentiment and loyalty as well as football and business. Like

all good pop will soak operas there is no certainty about which way the

plot will twist next. I am joined by Drew Roberton from

the Rangers Supporters' Association. How are you feeling tonight as a

Rangers supporter? It is disappointing that Walter Smith has

chosen to resign. He will have his own reasons. One wonders where this

will read as next. When you think it cannot get any worse, then today

comes along. The supporters have concerns about the financial

stability of the club. Other major shareholders have the same opinion.

There are calls for an extraordinary general meeting from some

shareholders. Yes, there has to be an expiration of what is going on.

There is a lot of room and conjecture about the financial

position of the club. That must be cleared up. Ally McCoist displayed

Walter Smith as the glue that holds Rangers together. Without him what

could happen? Ally McCoist could possibly be isolated without Walter

Smith. I know they are close and enjoy a good working relationship. I

am sure the two of them have discussed it. I would hope Ally

McCoist would continue as Rangers manager. Are you concerned by a

return of Charles Green? I cannot understand it. He chose to resign. I

do not understand why we as a club needs to employ a consultant. We

have a Chief Executive in place. We have a board in place. Why do we

need a consultant? Do you have confidence in the present board Mr

Mark at the present moment, not a lot.

Why has Walter Smith gone as far as you can make out?

He was not there for his financial acumen. He was there because he

represented the soul of the club. The supporters knew he was their

man. That was the role he played. John Gregg was in a similar position

until he quipped. -- John Greig was in a similar position. He is a man

who has a strong record of success at Ibrox. He has got a reputation to

protect. He has got his dignity. mentioned factions at the club. What

are these factions? It seems to be to do with personalities. It is less

clear that it is to do with strategy. It is not even as simple

as saying it is to groups. But there are roughly two factions, they both

agree that Rangers has spent to match. It raised �22 million last

winter and is burning through that rapidly. It will take a couple of

seasons to get back to where they think it ought to be. At the end of

the day what has focused the minds of institutional investors is that

money talks. They are not in this for emotion. They are in this to

make a profit. That is what institutional investors do. That is

how they raise their money. They have watched the share price go from

over 19p last January -- from 90p in January, down to 42p. They are

sitting on paper losses. They want to see what will happen. They want

to turn that around. There is no emotional attachments. They will be

ruthless if they think there is a better management team that can turn

this around. Where is this going?It looks like there will be an

extraordinary general meeting in the next six weeks. One would have to be

called unless this can be resolved beforehand. It is not just down to a

matter of directors battling it out. It comes down to who has the

shareholding power. This is about institutional investors. There are

two big minority groups. Thank you very much.

Tomorrow night at Ibrox Rangers take on Newcastle United, who earlier in

the summer became embroiled in a row over payday loan companies. One of

their Muslim players said he would not wear the club strip if it

carried sponsorship for Wonga -1 of the best-known payday loan

operators. Shortly after that the Archbishop of Canterbury got

involved. Today Alex Salmond was calling for a cap on interest rates.

That could the best solution be to have more payday loan companies?

These days it is not hard to walk down any high street that offers pay

day loans. Pay day loan companies also have a high profile online,

often promising fast approval for cash loans. If I type the term pay

day loan into a search engine, I am almost immediately offered a sizable

list of options. There is a long-term option that has a scene

for hours and getting themselves into crippling debt. The First

Minister has now pledged action, saying he wants short-term interest

caps, along with other restrictions. Without independence, Alex

Salmond's options are limited. That sentiment has found favour in some

quarters. The head of a leading credit union says some people come

to him with as many as ten short-term loans in place. It is

very difficult once they get into that position where they have come

to rely on it. A financial cancer has developed. They do not know if

they can get out of it. What can they do? People get into desperate

situations, even to the extent of contemplating -- contemplating and

carrying out suicide. The issue has also exercised the church. The

Archbishop of Canterbury has warned Wonga that the Church of England

plans to force a out of business by competing against it. The campaign

suffered a blow when it emerged the church had invested indirectly in

the online lender, but the basic premise has been supported north of

the border. 15 years ago, this Reverend laid out a campaign that

spot for fair financial services. Part of it was to cut interest

rates. At that time, we were talking about interest rates of 150%

annually, from doorstep lenders, and that seemed quite horrific at the

time. Now we are talking about ten times that, more than 40 times

that, in terms of interest rates. It is quite stunning. As one of the

country's better-known moneylenders, Wonga comes in for a

fair amount of criticism. The company, says that risky borrowers

are denied loans, and those who do take them are told exactly what they

have to repay. Today the citizens advice service launched a campaign

urging can't -- customers to fight back against what they call

unscrupulous lenders. The consumer finance Association, rich represents

operators in the sector, says its members are the only members who are

put in place -- lenders who are put in place under monitoring by their

companies continues, so does the business they do. It seems they are,

for the moment anyway, here to stay. In Edinburgh now, Professor Jonathan

Crook, a specialist in consumer credit at the Edinburgh University

business school. And here in Glasgow, Margaret Lynch, the Chief

Executive of Citizens Advice Scotland.

What have you got against pay day loan companies? We have no

particular objection to them. We understand that, in difficult times,

people will sometimes need access to short-term credit. The problem is

the way the pay day loan sector is operating at the moment. It is

simply unacceptable in terms of the rates of interest that they are

charging, unacceptable in the fact that they are willy-nilly going into

people's bank accounts and emptying them of all of the cash and often

leaving families without the ability to put food on the table for

children, unacceptable and the fact that a lot of the buffet that they

make is actually depending upon -- the profits that they make is

actually dependent on rollover loans, a short term and high

interest loans that goes into unsustainable debts. A number of pay

day companies have withdrawn from the market recently. Is that

something you welcome? As long as those companies had been given a

warning that if they do not abide by the sector's code of common --

conduct then they will have to be, after. Do you think this is a good

thing? This is a difficult problem and there are different ways to try

and tackle this. On the one hand, I heard you talk about a rate cap.

There are advantages and disadvantages to that. Let's start

with the idea of more companies in the market. If we increased the

amount of competition in the market, the interest rates which people pay

will actually go down. How far will they go down? Until he is not worth

being in the industry anymore. that mean that some interest rates

could go up? It could, but the ones that have left the market are the

ones we have referred to earlier. What we really want, if we go the

more competition roots, its customers to be able to shop

around. The problem with this solution is that it takes time. It

takes time for interest rates to come down as companies compete. The

alternative, or one alternative, is to cap rates. One advantage to that

is that it is quick, and the sense that, as is seen at it is on, you

cannot have rates above that particular level. It also produces

interest rates for everybody. It also would probably reduce the evil

rate, because it would mean, and here is rub, that many people who

are considered risky would not be able to get a loan. -- the default

rate. The question is, where would they go? There is the unregulated

sector of the market, the market where I think we would all agree it

is not a great place to be, and there is quite a debate in the

United States as to whether or not people who do not get loans, who are

denied from the pay day loan sector, actually have access to other

funds. Let me bring in Margaret again. What do you see as the way

forward? People need credit, perhaps short-term credit, cannot go to pay

day loan companies, where should they go? In the first instance,

before we get to that point, we are campaigning at the moment, we have

got a consumer campaigns. We are saying to people who have taken out

a pay day loan, you are not powerless here. There are things you

can do to help yourself and we can do to help you also. The first thing

that we can do is check and see whether or not the company has

treated you unfairly, and if they have, then we can put a complaint

through to the financial on button. At the moment, the financial

ombudsman is finding about 72% of the complaints are upheld, and that

is when we are exerting a certain amount of protection. Do you support

the idea of a cap? Gas.What would you cap? The APR at Wonga is over

eight thousand percent that the moment. It has to be attractive

enough for investors who want to come in and provide and get a decent

return on their investment. We heard earlier about an unacceptable

return, 150%. Today we are tolerating 6000% as a return on

investment. How did that change happen? Which change?The interest

rates rising. I think the interest rates rose partly because people

suddenly found they needed credits and were more desperate to do that

to actually get the credit. Part of the problem is, if you cap the

rates, where would the high-risk people go? When someone goes to one

of these companies, their risk is assessed, and when it is a fast, it

is decided whether or not they get a loan. If they do not get a loan, the

question is, these people who are vulnerable in all sorts of ways,

being characterized as a high risk, and secondly, by people who are

typically not shopping around. They are desperate for funds. They do not

shop from place to place to find the lowest interest rate. The question

is, where do they go? I have cut rates sympathy with people who say,

well, the interest rate of several thousand percent. It is. But where

do people go if you cap the rate? The churches are talking about

competing with the pay day loan companies. Thank you very much for

that. Let's take a look at tomorrow's

front pages. As you would expect, Walter Smith is featuring on many of

them. He is on the front page of the Scotsman there. Alarms to detect