Before the strict regulation of payday companies, there were many payday companies. For those payday companies that survived regulation, the journey has been difficult. One large payday company that survived to tell the tale shares its journey from their launch until today. Like many other payday companies, this payday company has recently reported massive losses of 35 million pounds. This loss is in comparison to 2012 when the same payday company announced a healthy profit of around 60 million pounds.
- In 2007, two entrepreneurs put their heads together and founded a payday company.
- In 2007, they launch the website of the company. In line with many other payday companies, they offer loans up to 1000 pounds. These are short-term high-interest loans easily obtained and also quickly paid back to the company.
- 2008 sees the launch of the first product. In London, there are 40 employees and in Bulgaria they have a development team. According to the founder, they serve 50 000 customers during this early phase of the company’s development.
- Using similar unconventional methods, the company advertises their product. This unconventional advertising approach gathers condemnation from some campaigners.
- In 2011 Stella Creasy of the Labour Party carries on her condemnation of ‘legal loan sharks’. At this stage she calls for a cap on borrowing from the payday company.
- The Guardian awards the company the Digital Entrepreneur of the Year title.
- Continuing in 2011 there are reports that the company is lending to people who are on benefits. Students are also allowed to take out a student loan.
- The Office of Fair Trading (OFT) investigates 50 of the biggest payday companies.
- The payday company complies with changes requested by the OFT.
- In 2012 controversy is mounting against all payday companies. The industry is accused of exorbitant interest rates and unfair debt collection as well as cheating clients.
- At the end of 2012 the company reports, they have trebled their earnings.
- At the beginning of 2013 the company reports that it had to write of almost 80 million pounds in 2011.
- In March 2013, the OFT gives payday companies an ultimatum to mend their ways
- The Archbishop of Canterbury tries to take down the payday industry by competing with them using credit unions.
- The FCA, in October 2012, has the job of regulating the payday industry
- November 2013 gets the FCA to put a cost cap on payday lenders and at the same time a top executive steps back from running the payday company whose journey we are following.
- In July of 2014, all payday companies are obliged to follow new rules and many payday companies leave the industry.
- In September 2014, the payday company announces that their profits have fallen by half.
- 220 million pounds are written off for all customers in arrears by more than 30 days.
- In December 2014, the interest rate is cut in order to meet the cost cap.
- February 2015 and the company announces that 325 jobs, one third of the workforce, are to be cut.
Payday companies have plenty of challenges
The journey, so far, has been a difficult one. Payday companies, like any other company, need to make a profit and they need to employ people. Payday companies have their fair share of challenges. They also employ people and the job cuts are a loss to the community.