A series of new regulations aimed at “ending the cycle of debt,” could push as many as one quarter of U.K. payday lenders out of business.
The Financial Conduct Authority (FCA), which became the regulator of consumer credit starting today, said the measures are designed to undermine the predatory parts of the industry that offer background check free loans and then pile costs on to borrowers who can not afford them.
“We’ve estimated up to a quarter could leave,” said Martin Wheatley, chief executive of the FCA., reports the Financial Times. “We’d like firms to rise to our standards, but if can’t then they can leave the industry.”
The short-term loan industry in Britain has taken off, particularly in the post-economic crisis years. The industry has drawn negative attention of offering loans that have interest rates approaching 6,000 percent.
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