Britain’s second-largest lender, The Money Shop, to close 240 branches by end of June
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Payday loan companies are closing hundreds of stores after being banned from charging fraudulent interest rates.
The Money Shop, Britain’s second-largest lender after Wonga, plans to close 240 branches by the end of next month, bringing its total number to less than 300.
The number of stores operated by major payday lenders has increased from 1,400 at their peak in 2013 to 500 with the latest closings.
The Consumer Finance Association, which compiled the figures, claimed it would force some people to turn to illegal loan sharks.
But Peter Tutton, of the StepChange charity, said: “We don’t think people will turn to illegal lending because of a shrinking payday loan market.”
Labor Party consumer spokeswoman Stella Creasy, who has campaigned against payday loans, said: “The decline in convenience stores is to be welcomed as it reflects the fact that the new regulations are working.”
The cuts come after the Financial Conduct Authority passed rules that limit interest on short-term loans to 0.8% of the original amount borrowed per day.
Lenders had been criticized for imposing annual rates of up to 6,000 percent.
To date, more than 100 companies – including Check Center, Cash & Check Express, Cash Genie, and Speedy Dosh – have pulled out of the payday lending market after deciding not to apply for new credit licenses.
The Money Shop, owned by US credit giant Dollar Financial, said most of the 3,000 affected employees would be moved to other stores.