Actor Michael Sheen is on a mission to make the credit industry in the UK fairer for the most vulnerable and who could object to that.
He disapproves of the poorest people paying the highest interest rates to access loans and in some cases being refused credit altogether.
He’s backing the ‘Fair Banking Act’ at Westminster and has enlisted former prime minister Gordon Brown as a heavyweight supporter.
It’s a noble aim and the Welsh actor has, fair play, put his own money behind it.
That’s £100,000 we’re talking about, and we’re also told that he wasn’t paid for his time on this Channel 4 documentary either.
His plan is to bring debt relief to people in a swathe of Wales, around his hometown of Port Talbot, and to make a point about what he views as the distasteful secondary market in debt.
In a scene reminiscent of The Big Short he used some props to explain the credit market.
In place of Ryan Gosling’s collapsing Jenga, Sheen has cardboard boxes in the shape of money banks.
With these and some fake notes he explains that the payday or car loan you take out can be sold on to debt collectors and in turn to vulture funds if the loans are not ‘performing’.
As they debt passes down through these stages it loses value to the finance companies, but the debt on the individual stays the same or increases with additional interest and penalty charges.
Sheen wants to use his hard-earned £100,000 to buy £1m worth of debt and then to write it off, thereby removing the burden from these individuals. Nine hundred individual people it turns out.
So why would a company sell £1m of debt for one-tenth its value?
The reason isn’t sufficiently explained in the Secret Million Pound Giveaway.
Debt loses value as it becomes clear that the loan taker is unable or unwilling to make the repayments.
The original lender will then sell its loan book (a collection of debt) to a debt collector for less than its face value.
The original lender gets some of its money back and the debt collector hopes to make a profit by collecting more than the first finance company expected.
Thus the threatening letters and phone calls.
The sections of the loan book that the debt collector can’t recover is then sold on again at an even lower price and the cycle continues until the remaining debt is written off.
Sheen, with some help, has a number of hoops to jump through (getting a licence and regulatory approval) but after a two-year long road, he manages to pay the debt of 900 “ordinary” people in south Wales with his £100,000.
Because of data protection we don’t find out anything about these people’s stories, so no celebration parties at the end of the documentary, unfortunately.
You can only admire Sheen’s determination and generosity but he missed out on the essential requirement of personal responsibility and and an understanding of how liberal capitalism works.
Without penalties for failing to pay off your debts, credit markets would seize up and we would all be the poorer for it.
The practice of selling debt may be odious but think of it like the hyenas and vultures of the savanna. They are not pleasant creatures, but the system doesn’t work without them.
Michael Sheen’s Secret Million Pound Giveaway can be streamed at channel4.com
