Business

Money Shop could close 200 stores in restructure

Money shop Image copyright Getty Images

The Money Shop, a payday lender owned by US firm Dollar Financial, is in the midst of a consultation process to close as many as 200 of its 500 stores.

A full consultation will need to be done before a final number emerges.

As many as 350 staff could be made redundant out of a total of about 3,000 employed by Money Shop, the company has confirmed.

Tighter regulation has hit profits across the payday lending sector.

The company hopes to keep compulsory redundancies down by finding new roles for staff, sources told the BBC earlier. It has already closed about 40 stores.

Loan cap

The firm's reorganisation may also include closing one of its three head offices.

Money Shop's cutbacks follow the introduction by the Financial Conduct Authority this month of a cap on the costs of loans made by payday lenders.

Payday loan rates are now capped at 0.8% per day of the amount borrowed.

In total, no one will have to pay back more than twice what they borrowed, and there will be a £15 cap on default charges.

In a statement, Dollar Financial said it had informed employees of the plan, which involves putting together its online and retail business.

"Regrettably, it is possible that some 350 redundancies may be necessary as the company evolves its business to serve customers in a fair and sustainable way following the introduction of the new regulations on consumer lending, as well as removing duplication of facilities inherited through previous acquisitions," it said.

"We fully acknowledge the impact these proposals may have on our people both personally and professionally and we will support affected employees through this process and into future employment."

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