Regulations put in place by the FCA (which is the Financial Conduct Authority) for payday lenders may be affecting how common loan sharks are to see. Many Britons and economists fear that because payday lenders are experiencing tighter restrictions, loan sharks will become increasingly common.

There is a validity to this concern, as loan sharks are often seen as last resort for people who are turned down for loans through other avenues. The payday lenders, as they go through more severe regulations, are going to have to turn down more people. They have to be careful with who they approve, as they do not want to take on risky ventures. In some respects, they are becoming more like banks.

The new regulations place limits on how much payday lenders can charge for their services. These limits affect interest rates, rollovers and every charge that payday lenders require of their customers. That makes it harder for lenders to make a profit or at least to make as much of a profit as they did before. What that means is that they are going to be more careful about the kinds of people they approve loans for.

Payday lenders are tightening their own practices, even as the FCA is tightening their own. This ensures that fewer people are accepted for payday loans, or at least a large percentage of the population would be exempt from loan approval. Payday lenders are taking fewer risks because there is less money in there for them.

This in turn causes the low income people and those with poor credit to have to go elsewhere for the loans they require. They are being rejected by the very lenders they counted on to save them after banks and other lending institutions turned them down. Typically, it would only be banks that required credit checks before loan approval. That’s why many borrowers tried to use payday loans as a means of borrowing money. Payday lenders traditionally do not require any credit check.

But even that aspect of the industry is changing. A few payday lenders are introducing credit checks and being extremely careful as to who they loan money. They only want to deal with people they are reasonably sure will pay them back on time and in full.

Now this has created an opportunity for the loan sharks. They don’t require credit checks, obviously, but their interest rates tend to much higher than those legal lenders. They operate outside the law, and their tactics are reprehensible. They intimidate and threaten their customers, even going to far as to attack them when they do not pay on time.

While the loan shark situation has become worse in the UK since the payday loan restrictions were implemented, the government has been cracking down on loan sharks. Numerous arrests have been made over the past months, and many more are in progress as investigations are taking place. The government is trying to clean up the loan shark situation, which is experiencing record lending. For now, financial experts are advising those who are having trouble to be approved for loans to try other payday lenders. Not all of them are equally restrictive in who they approve, and with a little effort, nearly anyone can find a loan that will work for them.