UK has a payday loan store for seven banks and building societies | Loan and debt

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Main streets across the UK now have at least one short-term loan store for seven banks and building societies, according to a study prepared for The Guardian, which shows how pawn shops have become commonplace in many neighborhoods .

Research by the Bureau of Investigative Journalism reveals that Glasgow is the payday loan capital of the United Kingdom, with 40 stores operated by the largest quick loan stores. On a per capita basis, the London Borough of Lewisham has the largest number of stores, with nearly eight loan stores per 100,000 residents.

Data showed that major lenders now operate 1,427 stores in England, Scotland and Wales, and 49 more in Northern Ireland. Many shopping streets have also seen smaller chains open since the onset of the financial crisis, so the numbers paint a conservative picture of how many people are currently on the country’s shopping streets.

Unlike short-term lenders, banks have reduced their networks. Barclays recently announced that it plans to close up to 400 branches across the country. A recent report from the University of Nottingham found that there were 10,348 branches of banks or building societies left in 2012.

Paul Blomfield, Member of Parliament for Sheffield who campaigned against payday loans, said: “These shocking numbers show the scale of the payday loan epidemic on our main streets. Their corrosive impact is then often exacerbated by companies grouping their stores in deprivation areas. “

Since the financial crisis, the payday lending industry has exploded, with online stores and big box stores lending a total of around £ 2 billion to 1 million borrowers in 2012. Interest rates exceeding 1000% APR is common, and although loans are designed to be repaid after a few days or weeks, borrowers often renew their loans, which means costs rise quickly. A charity recently helped a client whose debt of £ 200 had grown to £ 1,851 in just three months.

Most payday loans are done online, with the Competition Commission recently finding that internet lenders, including companies such as Wonga and QuickQuid, were responsible for 80% of the loans. The watchdog also found that borrowers using high street businesses were significantly more likely than online customers to be social renters, working part-time or unemployed, single parents, unskilled, or low-income.

The BIJ mapped the branches of short-term lenders – the first time this has been done – and the distribution of stores was compared to official government data on deprivation. The research focused on the seven largest chains of short-term lenders – including Money Shop, Cash Converters, Cash Generator, and Check Center – and only looked at branches promoting short-term loans alongside. pawn shop and other services.

Large lenders, many of which are owned by foreign companies, have grown rapidly in recent years. The Money Shop, which is part of an American company, has grown from 168 stores in spring 2006 to 564 in 2013. Oakham, which is UK-owned and offers three- to six-month loans, has gone from being a store at its launch in 2007 to 22 today and claims to open branches all the time.

While Money Shop recently opened a store in the affluent Muswell Hill district of north London, mapping shows loan shops are clustered in disadvantaged areas. Lewisham is the 16th poorest of England’s 326 local authorities, according to the Department for Communities and Local Government ranking.

Halton, a borough on the Mersey Estuary east of Liverpool, had the third highest number of stores for each resident in the Bureau’s research, with just over seven stores per 100,000 residents. The district is the 32nd most disadvantaged local authority in England. The neighboring city of Liverpool, ranked fifth among the most disadvantaged local authorities in England, came 12th in the ranking of stores per 100,000 inhabitants. In total, the city council has 26 short-term loan shops.

Glasgow City’s 40 stores are complemented by others in the West Dunbartonshire and Inverclyde area, which were also in the Bureau’s top 10 for the number of stores per capita. A recent West Dunbartonshire Council Economic Profile indicated that 26% of the local community’s children were growing up in poverty and one in four residents drew all or part of their income from social assistance, compared to a near UK average one in seven.

In contrast, affluent neighborhoods like Richmond, Kensington and Windsor have less than one loaner store per 100,000 residents.

Rules limiting the number of loan renewals by a borrower are expected to come into effect in July, and the new sector regulator has been tasked with introducing a cap on fees by the end of the year. However, activists suggest the changes do not go far enough to protect vulnerable consumers.

Blomfield said action was needed to allow neighborhoods to turn down new stores. “Councils need new planning powers to be able to restrict the number of stores in their area, which would allow local residents to have a say in which stores can and cannot open,” he said. he declares.

The Consumer Finance Association, the trade body for a number of lenders, including Cash Converters, Check Center and Money Shop, denied that the lenders were targeting poorer areas of the country. Its chief executive, Russell Hamblin-Boone, said: “It is incorrect to draw such conclusions. Our member’s stores are located in population centers across the UK, in convenient locations where a wide range of customers live, work and shop. Lenders need to consider many factors when choosing store locations, including rate and rent costs, local recruiting pool, Main Street brand awareness, and competition from other stores.

Glasgow

UK payday loan capital; its 40 short-term loan stores operate in nearly seven outlets per 100,000 people. There are more on the outskirts of town in other areas of the council. In September, Glasgow was dubbed the ‘jobless capital of the UK’ by the Scotsman newspaper, after the Office for National Statistics said 30% of households had no one between 16 and 64 in employment in 2012 ; across the UK the figure was 18%. Last year the average salary in the city was £ 20,799, below the Scottish average of £ 21,608.

Lewisham

The Borough of South London has 21 outlets of the main short-term lenders on its streets, or nearly eight per 100,000 inhabitants. The region is the 16th most disadvantaged in England and the median salary is £ 27,521, lower than the figure for central London as a whole.

Lewisham has been hit hard by the recession, with the number of people claiming Jobseeker’s Allowance dropping from 5,746 in July 2008 to 9,283 in November 2010, or 5% of its working-age population. This compares to 3.9% in London and 3.5% for the UK as a whole.

In 2012, the council’s local economic assessment said: “Lewisham is a good place to live, even though there is a lot of deprivation and poor housing.

Halton

The main short-term lenders have nine branches in Halton, in the north-west of England, or 7.2 stores per 100,000 inhabitants of the borough, which includes the towns of Widnes and Runcorn.

In January, the unemployment rate in the borough was 4.1%, with 3,292 people claiming a jobseeker’s allowance, placing it 34th out of 326 local authorities in England. Some 9% of 16-18 year olds were neither educated, employed nor in training, and it is the 32nd most disadvantaged English district. However, the average salary in Halton, at £ 21,293, is above the level of £ 21,293 for the entire North West.

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