July 2 - As Britain tightens its belt payday lenders are earning millions from those who are struggling to pay their bills. Joanna Partridge reports on what the UK government is doing to tackle ''deep-rooted'' problems in the loan industry.
In cash-strapped Britain, one business is booming: money lending. There are dozens of payday loan firms - some charging up to 5000% interest a year. They say they provide short-term credit to those who can't borrow elsewhere But critics say the industry preys on the low-paid - like Elizabeth Matthews who is unemployed and on benefit. SOUNDBITE: Elizabeth Matthews, Borrowed money using a payday loan, saying (English): "Very easy to get, yeah. Otherwise I wouldn't have been able to. I got 4 altogether. So yeah, they must have been really easy to get." Someone taking a £100 loan at the beginning of July could end up owing as much £685 by the start of April 2014. The government says it's trying to tackle the problem. Sajid Javid is Economic Secretary to the Treasury. SOUNDBITE: Sajid Javid, Economic Secretary to the Treasury, saying (English): "We're introducing a regulator with real teeth, it's going to be on the backs of payday lenders, it's going to be making sure that the regulator's hand is on the shoulder of the lenders all the time, they're already feeling that." Cracking down on payday lenders' advertising has also been discussed. But several previous initiatives have had little impact. And lenders' coffers keep swelling. Britain's best-known payday lender Wonga trebled its profits to almost 46 million pounds in 2011. PTC Walthamstow is just a few miles east of London's financial district. It's quite a deprived area, and on the High Street shops and traditional banks nestle alongside money lenders and pawnbrokers. Many Britons now use their services. In fact the payday loans industry is now estimated to be worth £2 billion in the UK. Walthamstow MP Stella Creasy says tighter regulation is needed. SOUNDBITE: Stella Creasy, MP for Walthamstow, saying (English): "Not everybody who borrows from a payday lender gets into difficulties, but enough of them do because of the terms of the loan, because of the high interest rates and the late payment fees and the charges that are incurred. Capping would put a limit to all that, it would set a number beyond which it would never go for any loan, so you would know the amount of debt that you could get into. It's what works in most other countries, like Japan, America, Canada, France, Germany, so why British consumers don't deserve the same protection is beyond me." But there's no sign of any new laws to limit the amount of interest payday lenders can charge. And this year alone 5 million Britons are expected to use their services.