Payday Lenders

With Wonga, Britain's biggest banker, on the verge of bankruptcy, many payday loan companies will consider their next move. Accompany us on our way to the top five payday credit centres, from the toughest to the most forgiving. The Netherlands have some of the toughest payday credit regimes in the game.

As early as the early 2000s, the nation experienced an increase in the attractiveness of "flitskrediet" or "flash credits", i.e. mainly non-regulated payday mortgages with APR interest of up to 600 per cent. Leading up, the liquidity credit markets were valued at 6 million ($6.9 million), and due to the small volume of credit, they were not backed by the Financial Markets Authority or the Financial Supervision Act.

The Socialist Party of the Netherlands launched a campaign in 2009 to regulate the payday credit markets. Payment day lenders must now obtain the proper operating permit and comply with the banking interest ceiling plus 12 per cent. 2- The US has the world's biggest payday credit economy, although credits are lawful only in 36 states.

The first payday loan came onto the US domestic loan markets in 1993 when the Cleveland business man Allan Jones, later known as the "father of payday loans", established Cheque Into Cash. Checking Into Cash and his countrymen came in to close the gap, and the sector skyrocketed, receiving a rating of $46 billion by 2014.

Today, the payment day loan system at the domestic levels is governed by the Office for Consumer Protection under the Dodd-Frank Act passed by President Obama following the 2008 global economic downturn. However, it is up to individual government to determine whether to legalize or prohibit payday credit in their own country. Throughout the 27 eligible states, payday lenders are lawful and subjected to little regulatory, which means that singles payback loan with an APR of 391 per cent or higher are the order of the day.

The Arizona example is one such example - it keeps an upper limit of 36 per cent for yearly interest on all payday debt. All other 14 states and the District of Columbia prohibit payment day financing of any kind. UKThe UK payday credit markets are relatively well organised, but have been involved in a number of scandals in recent years.

First payday financier in the UK was The Money Shop, a wholly owned US company of Dollar Finance Corp, which opened its door in 1992. In contrast to the USA and Canada, the British payday credit markets did not really gain momentum until the mid-2000s - but when it took off, it burst into flames.

Investigations by Consumer Focus show that in 2009 alone 1. Two million Britons took out 4. 1 million mortgages, equivalent to £1.2bn ($1.5bn). By 2013, this figure had risen to 12 million credits valued at 3.7 billion pounds (4.8 billion dollars). Up to that point, the payday banking sector had come under the responsibility of the 1974 Consumers Credit Act, which required lenders to obtain a license from the UK Office of Fair Trading (OFT) to provide credits to consumers.

The OFT, however, did not really act as an industrial regulator allowing lenders to adopt non-ethical policies such as aggresive collections and unaccountable credit granting. The Financial Conduct Authority took over the supervision and regulation of the sector in 2014. The system introduced interest and fee limits at 0.8 per cent of the amount lent per annum, fee limits at 15 ($19) and overall limits at 100 per cent, which means borrower would never have to pay back more than twice the amount they had lent, no matter how late they were at repayment.

Today, the industry's biggest financier, Wonga, which accounts for 40 per cent of total revenue, is in administration - but there are many companies willing to hurry and take their place. CanadaThe Canada payday loans sector has become more flexible in recent years as credit limits are set by the province rather than the state.

In the mid-1990s, payday lending became popular with Canada's consumer as advance payments became less and less available and employees had to seek elsewhere to obtain short-term credits. More than 1400 payday lending operations have been launched across the nation, with an average of two million Canadians per year using a payday bank.

During 2007, the Canada federal authorities adopted a law to eliminate payday loans from the penal codes' jurisdictions and allow each county to establish its own limits on fees and fines. UK Columbia has the most stringent requirements - lenders cannot bill more than $15 per $100 for a two-week payday credit, and fines for surrendered cheques or pre-authorized direct debit are limited to $20.

Is the most compliant, with a $25 per $100 limit on the costs of a $25 per 100 mortgage and no upper limit on fines. 5- AustraliaThe Aussie authorities have been flexing their regulation muscle on the payday debt markets lately, but there are still gaps in the law. As in many other jurisdictions, Australia's payday borrowing requirements grew during the 90s, when banking and cooperative banking institutions withdrew their short-term borrowing and consumer recourse was made to other means for a rapid solution to the problem.

Between 2004 and 2014, the small loan markets grew twenty-fold and were estimated at $400 million in June 2014. Australian payday credit is now backed by the Uniform Consumer Credit Code but has been a completely non-regulated industry, and there are still a number of UCCC loops that lenders often use.

During 2012, the federal administration passed the Consumer Credit Legislation Amendment Act, which prohibited credit in excess of $2,000, which must be repaid in 15 or less working days, as well as a limit on lending rates and interest, which included a 20 per cent start-up charge and a 4 per cent per month uplift.