How to start a new payday loan company?

[Sean Grey]

Hi all

I've seen some old threads on his from years ago (a decade ago!) so not sure how relevant they are now... does anyone have any advice for quickest /easy ways to start a payday loan company ideally without the need to do the whole consumer fca registration bits straight away etc?

Many thanks in advance

 

[tony84]

You need to register with the FCA. Absolutely no way around that.
You might want to have a look at what is happening to pay day lenders at the minute, they are all being ripped to pieces with complaints going in left right and centre.

 

[WaveJumper]

As above rules are here:
https://www.gov.uk/offering-credit-consumers-law

 

[simon field]

Hi all

I've seen some old threads on his from years ago (a decade ago!) so not sure how relevant they are now... does anyone have any advice for quickest /easy ways to start a payday loan company ideally without the need to do the whole consumer fca registration bits straight away etc?

Many thanks in advance

If you want to do it unofficially, just start lending money out.

 

[japancool]

I wouldn't. Loansharking is a criminal offence.

 

[Mark T Jones]

If you want yo do it without FCA regulation then best way would be to find a dodgy boozer, get friendly with some hard cases (time served ant Her Majesty's is a bonus), find the junkies and start lending

If you want to do it properly quick and easy won't be part of it

 

[Newchodge]

If you want yo do it without FCA regulation then best way would be to find a dodgy boozer, get friendly with some hard cases (time served ant Her Majesty's is a bonus), find the junkies and start lending

If you want to do it properly quick and easy won't be part of it

Are you inciring someone to breach the Covid-19 restrictions? None of the dodgy boozers near me has re-opened (officially) yet!

 

[simon field]

Are you inciring someone to breach the Covid-19 restrictions? None of the dodgy boozers near me has re-opened (officially) yet!

No, which gives the OP until Monday to perfect his sales pitch!

 

[Darren_Ssc]

No, which gives the OP until Monday to perfect his sales pitch!

Shouldn't be too difficult since the business model is basically lending money at exorbitant rates to people who'll crawl over broken glass to accept it and will do anything possible to make sure they pay you back.

If it wasn't for the pesky FCA Provident would be like a golden egg laying goose that never dies.

 

[Interestedobserver]

I was ops manager for a well known nationwide payday loans company many years ago for several years

To the best of my knowledge all the area managers who worked for me and shop managers all do something else now

The laws and rules changed. Post dated cheques with guarantee cards used to be a big part of how we operated. That was outlawed many years ago

Some of the staff who worked for me got into pawnbroking. That's still viable and is kind of recession proof as well. It's got more legs than payday loans IMO

I got out of the industry entirely more than 15 years ago at the right time I think. Although it flourished for a while after that.

 

[Mr D]

I was ops manager for a well known nationwide payday loans company many years ago for several years

To the best of my knowledge all the area managers who worked for me and shop managers all do something else now

The laws and rules changed. Post dated cheques with guarantee cards used to be a big part of how we operated. That was outlawed many years ago

Some of the staff who worked for me got into pawnbroking. That's still viable and is kind of recession proof as well. It's got more legs than payday loans IMO

I got out of the industry entirely more than 15 years ago at the right time I think. Although it flourished for a while after that.

Back in that era I used to do postdated cheques with the pawnbrokers - a 10% fee on the cheque and dated for 28 days later.
Sometimes necessary, otherwise a very bad idea.

Unfortunately when the choices are all bad then need to simply get on with it. Despite the cost.

 

[Interestedobserver]

Back in that era I used to do postdated cheques with the pawnbrokers - a 10% fee on the cheque and dated for 28 days later.
Sometimes necessary, otherwise a very bad idea.

Unfortunately when the choices are all bad then need to simply get on with it. Despite the cost.

Yep we used to cash upto 5 x £100 worth of those cheques and pay out £450 per month

Only criteria was Id and a valid cheque guarantee card

No affordability checks etc - we based giving the loan on the fact you must have decent credit to have a valid cheque guarantee card

And then the big earner was allowing people to roll them over and come in and give us 5 x new cheques for 100 each every month and we gave them last months cheques back

The same charge of £50 each month

We had people rolling over for 2 or 3 years plus

So by the end they may have paid £1,800 in fees and still owed £500

Before I left we had to start limiting rollovers to maximum of 6 times I seem to remember or at least we started having to look at this due to scrutiny on th entire industry

We also cashed wages and other cheques same day for a fee of between 5 per cent and 8 per cent ish

That people were prepared to do this rather than wait for their cheques to clear. It was cheaper than going overdrawn for many of them

It was a booming time for that industry

The business I worked for had just 6 stores when I started but through new openings, mergers and acquisitions we had 200 stores approx when I left

We grew that quick in less than 3 or 4 years

This was the business where one of my shop managers took a day off sick to go and attend a funeral

And a few days later I found out if was Ronnie or Reggie Krays funeral (can't remember which)

 

[ethical PR]

Yep we used to cash upto 5 x £100 worth of those cheques and pay out £450 per month

Only criteria was Id and a valid cheque guarantee card

No affordability checks etc - we based giving the loan on the fact you must have decent credit to have a valid cheque guarantee card

And then the big earner was allowing people to roll them over and come in and give us 5 x new cheques for 100 each every month and we gave them last months cheques back

The same charge of £50 each month

We had people rolling over for 2 or 3 years plus

So by the end they may have paid £1,800 in fees and still owed £500

Before I left we had to start limiting rollovers to maximum of 6 times I seem to remember or at least we started having to look at this due to scrutiny on th entire industry

We also cashed wages and other cheques same day for a fee of between 5 per cent and 8 per cent ish

That people were prepared to do this rather than wait for their cheques to clear. It was cheaper than going overdrawn for many of them

It was a booming time for that industry

The business I worked for had just 6 stores when I started but through new openings, mergers and acquisitions we had 200 stores approx when I left

We grew that quick in less than 3 or 4 years

This was the business where one of my shop managers took a day off sick to go and attend a funeral

And a few days later I found out if was Ronnie or Reggie Krays funeral (can't remember which)

You must be so proud

 

[Interestedobserver]

You must be so proud

Clearly you are being sarcastic

Back in those times the banks and their overdraft fees each month were even worse than the fees for people using payday loans

Hence why people used the service

You will find the banks were made to change their overdraft rules as a result

And many more things the banks did that they've had to pay huge compensation for now

That business in the UK purely copied the US model

The world has changed for the better

In answer to your question I'm proud I did a good job managing the team and business I was employed to do

Never once did I feel I was exploiting anyone. We were shops on the High Street that people came to when they had problems with their own banks

And we operated within the laws at the time

At the stage people came to us their only other alternative would be a pawnbroker or a loan shark with their own other ways of collecting debt! Much worse than a cheque guarantee card no doubt (the banks themselves would honour the cheques due to guarantee cards)

We provided a service that was needed by people as Mr D says above

I only got out of the industry because I found something I enjoyed more

But I learnt a lot about managing people in that role

Prior to that I was a store manager and then area manager for William Hill Bookmakers

Equally the gambling industry has change a lot as well

I was proud for the job I did for them as well

They weren't my businesses I was just employed by them

And there are many things you can't do in many industries today that were accepted as being ok 20 plus years ago

The world has changed an awful lot

 

[Interestedobserver]

You must be so proud

Re the bit about affordability checks - the banks issuing cheque books and valid guarantee cards to their clients was enough for us to know the customers were credit worthy and risk cashing their cheques

In time the rules changed and the banks themselves fought that payday loans companies should not be allowed to use guarantee cards on cheques any longer

And in due course guarantee cards stopped altogether and just like with mortgages etc affordability of loans became the new criteria

It's much harder to get loans and mortgages full stop now and all about affordability

But by then I had left the industry regardless

 

[Darren_Ssc]

Clearly you are being sarcastic

Back in those times the banks and their overdraft fees each month were even worse than the fees for people using payday loans..

I helped a friend with an ombudsman complaint against Provident a couple of years ago. Long story short, he got about £4000 interest refunded plus statutory interest on that. It all started with a £50 loan.

A year before that I helped with a complaint against Halifax for pushing him onto a premium current account that he obviously could not afford or even need to have. He got just over £1.6K for that since it had run for many years. This is the same Halifax who wouldn't give him the time of day when he wanted the small loan that only Provident were willing to offer.

Much as I detest the business model of companies such as Provident, etc. There are no innocents in the world of financial services.

 

[Interestedobserver]

I helped a friend with an ombudsman complaint against Provident a couple of years ago. Long story short, he got about £4000 interest refunded plus statutory interest on that. It all started with a £50 loan.

A year before that I helped with a complaint against Halifax for pushing him onto a premium current account that he obviously could not afford or even need to have. He got just over £1.6K for that since it had run for many years. This is the same Halifax who wouldn't give him the time of day when he wanted the small loan that only Provident were willing to offer.

Much as I detest the business model of companies such as Provident, etc. There are no innocents in the world of financial services.

Spot on

 

[Interestedobserver]

Who did you use for your payday loans Mr D?

You can claim compensation from some of them last time I looked?

Like you could the banks for PPI

 

[Mr D]

You must be so proud

I for one am glad such companies offered that service.

There's always payday loans, losing half your income to bank charges, or even skipping meals for a week or so....

 

[Mr D]

Who did you use for your payday loans Mr D?

You can claim compensation from some of them last time I looked?

Like you could the banks for PPI

I ended up using Wonga.

The compensation I ended up getting last year (I think) was £40 odd quid.

 

[Mark T Jones]

I for one am glad such companies offered that service.

There's always payday loans, losing half your income to bank charges, or even skipping meals for a week or so....

The industry get a bad rep - and in truth is often abused by both sides

In reality, short-term lending has been with us since the dawn of civilisation - it's the oldest profession - and will be with us til the end of civilisation.

the best we can do is keep it legal, visible & regulated.

 

[Ian J]

In reality, short-term lending has been with us since the dawn of civilisation - it's the oldest profession - and will be with us til the end of civilisation.

Second oldest surely

 

[Mark T Jones]

Second oldest surely

Where did they get the money to pay for that?

 

[Mr D]

The industry get a bad rep - and in truth is often abused by both sides

In reality, short-term lending has been with us since the dawn of civilisation - it's the oldest profession - and will be with us til the end of civilisation.

the best we can do is keep it legal, visible & regulated.

Trouble is the people who are turned down by mainstream lenders - perhaps for good reason - will still want money.
Natwest say no to a 7.5% loan? The payday lender says no at 500% for a loan? Then the guy on the estate lending at much higher fees will give a loan.... and you will pay!

The latter is what has been tried to be stamped out for many years. Not always successfully or else replaced by someone else ....
Those operating illegally don't appear to care for government regulation of their activities and charges. And those with little spare money and wanting a cash lump sum will find a way to get it.

On the game, selling a kidney, whatever...

 

[japancool]

Where did they get the money to pay for that?

But wait - who made the money that they were lending?

 

[Mark T Jones]

But wait - who made the money that they were lending?

Bitcoin.