Pay day lenders have attracted much public attention in the recent years, with many critics arguing the lure of instant cash in fact places those already struggling with debt deeper into hot water. Calls for stricter regulations led to enforcement of restrictions across the pay day loaning industry, placing a cap on rates of interest in an attempt assert control over key players.
The Financial Conduct Authority stipulated that effect of the regulations would severely limit the pool of pay day lenders available, whittling it down to just a handful of core companies. Inevitably this thinning of the industry has placed a number of lenders in the red, with Wonga a former house hold name in the pay day lending industry being among those to fall.
Once a leading force in personal loans, the company reported losses of £37.3m for 2014 with further losses expected in 2015, highlighting instability within a former thriving market. Poor public perception has been cited as a key factor in Wonga’s decline from grace as various scandals including the forging of documents causing irrevocable damage to a supposedly reputable and trusts worthy brand. As a result the brand witnessed a 36 percent fall in lending volumes and subsequently a decline in customers.
The squeeze of the regulators can be felt across the entirety of the industry with other lenders implementing work force cuts or being forced out of the market all together as the number of approved loans has shrunk by 75 percent.
It would appear the glory days of pay day loans have finally come to an end, with the industry brandishing a tarnished image following various investigations into the conduct of leading lenders. The question is where will the borrowers who once turned to these lenders for immediate financial relief now turn?
Regulators argue that borrowers will seek to tighten their belts, or alternative methods of help outside of traditional lending looking to their family and friends for financial support. However the feared alternative is the worry some may turn to alternative loan sharks.
Personal debt is a real and pressing issue that plagues many UK households, leaving individuals unsure of where to turn for help and support. Contacting a solicitor who specialises in Bankruptcy & Insolvency matters is essential in allowing you to regain control of your personal finances. For further information or guidance in relation to any debt issues contact Farleys Solicitors today on 0845 050 1958. Alternatively please complete an online enquiry form.