Simon Read: Fewer payday lenders means fewer victims of debt woes

  • @simonnread

Of course I feel sorry for the 120 workers in the North-west who have suddenly lost their jobs this week because of the collapse of their employer. But the fact that their employer was a payday lender means my sympathy is tempered.

They worked for the 27-branch high-street lender Cash Store, which operated in such places as Stockport, Blackburn, Bolton and Wigan. The business was described as "loss-making" by the administrator brought in by the company's Canadian owners, but I suspect that's as much to do with growing problems of making a profit under the tough new rules enforced since July by the Financial Conduct Authority.

The most high-profile victim of the rules was the US-owned Cheque Centre, which pulled out of payday lending in May. The 450-branch business was believed to have withdrawn from offering payday loans on worries that it couldn't make a decent profit under the regulations, which restrict profitable rollovers and enforce more responsible lending.

When the Financial Conduct Authority introduced the rules in April it revealed that around 100 of the UK's 210 payday lenders had stopped offering the service in the previous 18 months.

At the same time the Consumer Finance Association, which represents around 60 per cent of the high-cost credit sector, suggested that half of all payday loan firms could shut their doors as a result of the new rules.

While I don't want to celebrate the news that 120 more people are now unemployed, I am pleased to see the back of another high-cost credit company.

Twitter: @simonnread