Loan sharks will move in unless people in poorer communities can borrow from legitimate local sources like credit unions

It appears that half of all payday lenders have pulled out of the UK market in the last 18 months, according to news reports. The increased focus by the Financial Conduct Authority (FCA) on the business practices of payday lenders and the prospect of greater regulation is clearly having an effect. The UK’s high-cost short-term credit market has been coming under relentless pressure from the media and campaigners to change its ways. There was a story this month about loan sharks using dangerous dogs to intimidate parents to pay back loans when they collected children from the school gates. It emerged that the Illegal Money Lending Team in England is offering schools readymade lessons to warn pupils about the dangers of loan sharks.

The FCA is only part of the way through its thematic review of payday lenders and will consult on a cap on the total cost of credit for all high-cost short-term lenders in the summer, to be implemented early next year.

Continue reading…