myi: How are you finding current market conditions?
Cash365.com are comparative babies in the market having only been lending for several months! So, how are market conditions? We’ve nothing to compare it with but it does seem there are a lot of lenders out there. Fortunately the demand seems to be keeping pace but it is not limitless so will reach saturation at some point. When that happens, the strong will survive and there is no doubt that some will fall by the wayside.
myi: What opportunities has the recession presented for you?
There are some businesses that seem to thrive in a recession – gambling, pawn shops and, now it seems, payday lenders. However, it is the High Street bank’s response to the recession and their near refusal to lend that is creating the opportunity rather than the recession itself.
myi: The payday loan industry has received a lot of bad press over the years- condemning lenders such as Wonga for charging over 4,000% interest. Do you think it's wrong for critics to focus on cost?
I wish they would focus on cost! If they did, there would be no problem. What is unfair is focusing on A.P.R which has no relevance to the payday product. Imagine phoning your nearest Hilton Hotel to enquire about the cost of a room for a night and being quoted £43,800! No, it’s not, it’s £120 but they don’t have to quote the annual rate because they don’t rent rooms by the year. Similarily, payday lenders don’t lend for a year so why expect them to quote an annual rate?
myi: Would you say the payday loans industry is misunderstood?
I don’t think the payday industry is misunderstood by its target market i.e .the customer. Recent surveys suggest the opposite, that customers find the majority of payday lender’s terms of business clear and simple. They can easily see exactly how much their loan costs and when it has to be repaid. What is happening is that legislators and opponents think they know what’s best for the public. If some people got their way, the industry would be legislated out of existence but what would they replace it with? Is your High St. bank going to offer £100 over 10 days? I don’t think so – it would take more than ten days for them to make the decision!
myi: What opportunities are there for introducers in the payday loan sector?
All lenders live on leads and lots of them, so the opportunities for introducers who can produce quality leads are immense and can be quite lucrative. It’s a crowded marketplace though and it must be difficult for an introducer to differentiate themselves from their competitors. From Cash365’s point of view, we are concentrating on the Northern Ireland market which a lot of lenders avoid (we were previously in the secured loan sector there, so feel we know the market better than most) and would obviously welcome any introducer who can supply.
myi: In your opinion, what steps should the financial services sector be taking to re-build trust and confidence amongst consumers?
While I welcome sensible regulation and, in particular, the current review of the payday industry, I yearn for a return to simplicity. I remember 15 years ago a customer signed an application form and a credit agreement. By 2008 there was so much documentation required you had to post a small parcel! Did the customer ever read it? Did it offer any additional protection? I very much doubt it. Let’s have some common sense, simplicity and, above all, clarity.
myi: If you weren’t in the financial services what would you be doing?
I’m lucky enough that my partner & I have a lovely little house in the Algarve. Truthfully, if I hadn’t started my current business, I would be sitting in our hot-tub, on the roof terrace, overlooking the sea with a nice glass of white wine. Remind me why I started this again?
Terry O’Hare is CEO and founder of payday loan company Cash365. He previously ran a successful secured loan business and lives in the Isle of Man.
