Phil MeekinView Profile
Having come through the spending onslaught of Christmas you may be looking for a quick fix to tide you through until the next pay day.
Tighter regulation has hit profits across the payday lending sector. As a result, the first casualties in the industry are now being receiving media attention.
The Money Shop, a payday lender owned by US firm Dollar Financial, is in the midst of a consultation process to close as many as 200 of its 500 stores.
A full consultation needs completing before a final number emerges but as many as 350 staff could be made redundant. This is out of a total of about 3,000 employed by Money Shop.
The company hopes to keep compulsory redundancies down by finding new roles for staff. But it has already closed about 40 stores. Reorganisation may also include closing one of its three head offices.
Money Shop’s cutbacks follow the introduction by the Financial Conduct Authority of a cap on the costs of loans made by payday lenders.
Payday loan rates are now capped at 0.8% per day of the amount borrowed.
In total, no one will have to pay back more than twice what they borrowed. There will also be a £15 cap on default charges.
Despite concerns about the industry, this casualty does mean sources of available cash for those in financial difficulty do become less available. But this doesn’t have to mean facing Bankruptcy or a Debt Relief Order.
It will point some people to responsible sources of cash, for example the credit unions, but we hope that for most it will create the chance to address underlying problems about money management and seek professional advice on routes including Individual Voluntary Arrangements (IVAs) to deal with debt problems, mounting credit cards and loan repayments.
Two and half weeks until payday could seem like a very long time….