When the FCA changed the rules surrounding payday loans and the industry as a whole, the market changed. With many lenders going out of business and others completely changing the way that they operate, the FCA has continued to change the way the lenders are allowed to operate and improve the market for the lender.
Highstreet Lenders Became a Thing of The Past
Due to the fixed running costs as well as the rental costs for a physical store location, the FCA regulations made it much more difficult for several high street lenders to continue to make a profit. This of course left them in a difficult position as a result of these changing regulations. This, therefore, lead to many of them closing their doors permanently as a result of the new regulations and their inability to adapt.
The Payday Loans Market Has Shrunk Significantly
In addition to several high street lenders closing, it is important to note that the unsecured loans for bad credit industry have also shrunk significantly as a result of not being able to meet these new regulations. With caps on lending as well as tighter restrictions, several contributing factors have led to a decrease in the number of lenders that are currently operating on the market at this time. With these rules still changing, this is a part of the market that is still continuing to change even until the present day.
The Payday Loans Process Changed Completely
As the market continued to change, there have also been several changes to the payday loans process. With several lenders now required to conduct a number of in-depth background checks before they are able to consider someone for a loan, this has meant the loan application approval process has completely changed. Not only has this made sure that the lender is being more considerate, but it means that borrowers are likely to only be matched with a lender that can provide them with a loan type that they can payback.
The Market Has Become More Competitive
The final way that the market has adapted is by making the market more competitive. With lenders, all required to follow the same FCA caps and rules and regulations, the market is now operating in a much fairer manner. This is not only great for the smaller lenders looking to make a name for themselves within the industry but also great for those that are looking to borrow the money in case of a financial emergency as there are more lenders to borrow from that are proving the correct loan amount and affordable APR that will ensure they can pay it off on time.
With this in mind, there are several ways that the payday loan lenders and the FCVA have continued to change the industry and the way that the lenders interact with their potential clients as a whole. How will this continue to change with the potential of more FCA regulation changes in the future?