US lenders pushing short-term loans that charge up to 5,000 per cent interest per year are pouring into the UK, filling demand for credit from low income borrowers abandoned by retail banks.
Such so-called payday lenders, which also include homegrown companies, have been attracted by Britain’s relatively lax market. The volume of business has more than tripled in four years to about ￡2bn, according to an estimate by consumer group Which?
An increasingly hostile US political and regulatory backdrop has prompted many payday lenders to cross the Atlantic and move into some of Britain’s most deprived areas. Typically providing loans of up to ￡400 for a period of two to four weeks, these lenders target borrowers on below-average salaries who have been unable to access bank credit since the financial crisis.