BREAKING NEWS

BREAKING NEWS

Doorstep lender Morses Club looks to pick up customers after regulatory crackdown

Now Reading:

Doorstep lender Morses Club looks to pick up customers after regulatory crackdown

Text size Aa Aa

By Noor Zainab Hussain and Muvija M

(Reuters) - Britain's second-largest doorstep lender Morses Club <MCLM.L> expects to take on more customers as a regulatory crackdown forces smaller players to shut up shop, its chief executive said after the company reported first-half results on Thursday.

Doorstep lenders specialise in making small cash loans with repayments collected door-to-door.

Companies like Provident Financial <PFG.L>, Non-Standard Finance <NSF.L> and Morses have experienced a meteoric rise in the decade since the financial crisis, as banks held off loans to customers seen as at high risk of default.

Years of austerity meanwhile led poorer people to borrow more.

But the high interest rates charged for loans have fuelled a public and political backlash, leading to a regulatory crackdown as Britain's financial watchdog look https://www.reuters.com/article/us-britain-credit-regulator/uk-poised-to-protect-consumers-from-high-cost-credit-idUSKBN1FK1BMs to protect consumers from high-cost credit companies.

For a 200 pound loan repayable over 33 weeks at 10 pounds per week, Morses charges a fixed interest rate of 102.4 percent per year.

Last year Morses cashed in when Provident was hit by a botched reorganisation and took on about 23,000 customers.

On Thursday Morses reported stable customer numbers at 230,000 in the first half ending Aug. 25.

Chief executive Paul Smith told Reuters the opportunity for growth in customers numbers would now come from acquisitions of firms with around half a million customers.

"Nearly double the size of our customer base is sitting in the hands of smaller operators, and we believe that with increasing regulations, they will start to want to sell off and move on," Smith said.

He said the FCA wants lenders to improve record keeping and have proof of agent conduct, both of which necessitate a digital platform.

"To move to a digitised platform would be very expensive for them – in fact, so expensive in some cases that it would not make economic sense to carry on running the business," Smith said.

He said these firms had loan books of between 2 million-14 million pounds.

"We've got a number of them that are already in negotiations with us to sell, and undergoing due diligence," Smith said.

"In the last couple of years, we've already purchased 17 of those competitors."

Morses Club reported a 14 percent rise in first-half adjusted pretax profit to 10.5 million pounds on Thursday, which Peel Hunt analysts said was ahead of expectations.

(Reporting by Noor Zainab Hussain and Muvija M in Bengaluru; Editing by Jan Harvey)

euronews provides breaking news articles from reuters as a service to its readers, but does not edit the articles it publishes. Articles appear on euronews.com for a limited time.