The Money Shop's owner Dollar Financial says tough new curbs for payday lenders could cost it up to £10m a year
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Britain’s second largest payday lender says that years of soaring growth have ended after an overhaul of the market by the Office of Fair Trading.
US-based Dollar Financial, which owns The Money Shop and internet lenders Payday UK and Payday Express, said turnover from online lending in Britain fell 2.9 per cent in the three months to the end of June. That compares with a rise of 34 per cent in the same period in 2012.
The lender told investors that tighter controls will cost it up to £10million a year. It said that the halt in growth had come from tighter limits on who can borrow and for how long.
Tighter controls: The Money Shop's owner, Dollar Financial, says new rules cost it £10m
The number of times customers can roll over loans into larger debts has been limited to three. However, Dollar Financial also told investors in a conference call that the drop had been compounded by aggressive marketing from rivals.
Executives said that such rivals were among those expected to pull out of the market, but in the meantime were trying to grow the size of their loan book ‘in an effort to acquire as many customers as they can before the Sword of Damocles falls on them’.
Dollar Financial’s British operations are second only to Wonga in size. Cash America, which operates QuickQuid and Pounds to Pocket, is the third largest.
The Archbishop of Canterbury, Justin Welby, has been one of the fiercest critics of payday lenders, describing their interest rates as ‘usury’.
The OFT has referred the entire payday lending market to the Competition Commission, as first revealed by The Mail on Sunday in June.
The investigation by the OFT has already forced 20 of the top 50 lenders to quit the market or wind down their businesses.
However, Dollar Financial executives predicted that more lenders would drop out of the market and it could recover next year.
They said tighter controls on payday lending will make it ‘inconceivable’ that smaller operators will be able to operate legally in the UK.
Chairman and chief executive Jeffrey Weiss said: ‘We think many of the other operators, including some of the larger ones, will struggle with the necessary implementation and self-monitoring activities.
‘That is why we are confident that we will emerge from this process with a significantly stronger position.’
Read more: http://www.dailymail.co.uk/money/news/article-2401367/Money-Shop-owner-Dollar-Financial-admits-new-curbs-payday-lenders-hurting.html#ixzz2d0kustzP
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