The payday loan industry was formerly overseen by the OFT (or Office of Fair Trading). This office kept a very loose leash on the industry because it was afraid to stifle it. There were few restrictions, and the lending industry could more or less do as it pleased.
According to the OFT , the payday loan industry was a necessary industry. It filled a gap and met a need that was not being provided for by any other financial institution. The banks would turn down consumers based on their credit score, and those consumers would turn to payday loans to get the money they needed. If the payday loan industry was not there, the OFT feared, then consumers would turn to the loan sharks. Their fears seemed to be grounded, when years later the lending industry underwent regulation and loan sharks started to resurface more prominently.
The FCA took over for the OFT, and the OFT was shuttered shortly thereafter. It was clear that the FCA (or Financial Conduct Authority) was not happy with the way the OFT was handling things. They found this former regulatory organization to be lax and even timid. So the FCA imposed strict regulations for the entire payday loan industry. All short-term, high-interest loans were capped by the FCA.
This caused major upheaval, which made the payday loan industry scramble to keep up with the regulations and expand its customer base. The lenders tried to find new ways to reach a large number of customers, often changing up their advertising campaigns and expanding their reach into the online space.
In fact, it was the FCA regulations that pushed much of the industry toward online business and marketing. Now a large portion of the industry operates exclusively online, which is very different from how they operated just a few years ago.
The OFT may have been a supporter of the payday loan industry, but the public did not agree with the way it was handling things. The FCA said there was widespread support for its regulation initiative before the regulations were implemented. If that support had not been there, then they regulations may never have been put into place. Now that the industry has changed, the push for even more regulation is minor. Most consumers and advocacy groups seem happy with there the payday loan industry is right now and how it is being regulated. While the FCA has been tough on payday lenders, it has paid off for some lenders, as they have been able to appeal to new set of customers and revitalize their business by doing something different from what they had been doing for the past years.