High Street Payday Loan Lenders and the FCA

The state of the payday loan sector is changing for the better. With tighter regulation from the FCA and a willingness from payday loan lenders to tighten up ship there has certainly been a dramatic increase in the levels of customer service, transparency of the short-term loan application process, and a view to consistent improvement for the sake of the consumer. Finding an online payday loan lender is the way to ensure that you are working with the best rates, the best chances of securing a payday loan, and can have access to your account and details at all times through an online account. What about physical stores that are home to high street payday loan direct lenders?

The problem that many of these companies faced was that they had a high number of fixed costs to run a company, such as the cost of renting store space in an area where they would have enough footfall to attract potential customers. This leads to a lower percentage of profit and an approach to other services such as pawnbroking or similar. It is a tough market to remain viable within, and as a result there was often corner cutting to the detriment of the consumer.

This, coupled with the growing popularity of online payday loan services has led to an increase in standards, but a decrease in numbers of payday loan direct lenders. In the end this can only be a good thing for the consumer. In the past the borrower was at great risk of high and unmanageable interest rates and snowballing debts, without any assistance from the lender in terms of advice and debt management. The FCA did predict that there would be fewer payday loan companies on the market today than there actually is (in terms of physical stores of payday loan direct lenders), so the market is still there, but with the tightening of regulations and the proliferation of responsible online short-term lenders it means that the physical stores must also up their standards in order to compete.

Transparency has been a key factor in the drastic changes in the payday loan sector. Online short-term lending services have a greater advantage as it is much easier for them to provide visual evidence of transparency. This begins with the application process itself where many websites have a simple loan calculator which can be tweaked to change the loan sum required, the timeframe to pay it back, and the interest rate attached based on both of the first two factors. The modern payday loan borrower has access to specific information about how much they are signing up to pay back and when, including all fees and interest. They are now also told about any potential penalty charges, and advice on what to do should their financial situation change after taking out a loan and they are unable to make payments as a result.

All of these things increase standards of customer service and help to ensure that the market is a viable one. Those high street payday loan stores that have survived since the FCA regulatory changes will have to continue to adapt in order to survive.

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