We Told You So - Another Major Lender Pulls Out Of UK

About six months ago, this site was mocked when we suggested that lenders were on the verge of pulling out of the UK market if the short-term credit cap was not lifted. In the last few days, one of the UK’s biggest short-term lenders has stopped lending. It seems our sources were right after all.

Back in June 2017, we were informed that a group of lenders had approached the FCA, stating plainly that unless the cap on lending was lifted, they would pull out of the market. Our source told us that the FCA took the threat seriously and was, in fact, preparing to raise the cap on the cost of credit. For some reason, that never happened, and the cap remained at the original level of £24 per £100 borrowed per month.

The result was that we never returned to lending, and one of those major lenders has now followed through on their threat to leave the market. PayDayExpress.co.uk, which is part of the Dollar Group, has ceased offering new credit to both existing and new customers.

This now leaves just four to five lenders actively offering loans in this sector. However, we understand that even this pitifully small number might be reduced further. It is not farfetched to suggest that both Wonga and Quick Quid might also exit the market this year. This would leave Sunny.co.uk as the sole major national lender in this area.

There is no suggestion that any lender is insolvent in any way. In fact, they would be demonstrating sound financial judgment by leaving the market before reaching that point.

For those who might see this as good news, we urge extreme caution. People are becoming increasingly desperate to obtain finance, and the number of victims of financial fraud is rising. We observe this increase on a weekly basis. Moreover, these individuals are now being charged bank fees and failed payment fees to manage short-term financial problems—even though they never received a loan.

The downward trend in personal credit availability and choice is alarming. By 2019, the only places to obtain credit might be mainstream banks—or unlicensed lenders. One of these certainly won’t lend to the poor, while the other will. But that’s okay—we have plenty of police officers to protect the victims.