Payday firms face cap on charges as FCA acts to curb profits – Telegraph

[Legal Beagles]

The financial regulator is preparing to impose a cap on the excessive levels of interest charged by payday lenders in a bid to ease fears about profits in the sector. The Financial Conduct Authority is this week expected to impose severe restrictions on the amount payday loan companies can charge in an attempt to calm […]

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[PAWS]

Re: Payday firms face cap on charges as FCA acts to curb profits – Telegraph

What I cannot understand is why capping interest rates will result in pay day lenders no longer operating. These organisations make many millions of pounds profit (usually tax free may I add!)
Is there any reason why they would cease operating because they are only making a few million?
It is a sad fact that many people do have to use pawn shops/cash converters and the like, often having to part with family treasures just to keep food on the table. An overdraft facility is not a feasible option mainly because those who have access to an overdraft or are likely to be allowed such a facility are not likely to go to sub-prime lenders in the first place.
As we have seen from orfoster’s thread, Pay Day Lenders | Impact on Credit file, once you have dabbled in this market no bank will touch you either for a sort term loan or overdraft.
Are these pay day /sub-prime lenders saying that if their profit margins are capped to more acceptable levels then they will pull out of the market?
The reason why people are struggling to make ends meet is economic but the reason why people are driven to ‘the dark side’ to look for finance is often due to the way the ‘approved’ lenders have treated them. I am not saying keep lending to a bad risk; I am saying they should know the difference between a bad risk and someone going through a financial crisis.