The UK is one of the world’s leading economies, but it is an uncomfortable truth that millions of Britons struggle to make ends meet.
For decades personal debt levels in the UK have grown on the back of unconstrained consumer spending on seemingly limitless credit cards.
But the financial meltdown of 2008 finally brought the bust to the unsustainable credit boom. For many it meant a tightening of the purse strings in order to make less go further than ever before.
But for many more who simply could not make the numbers stack up at the end of the week, payday lenders offered a port in an economic storm.
In the post-crash period, the market for small cash advances mushroomed despite some loans coming with eye-watering four-figure annual percentage rates.
Despite concerns, the payday sector grew relatively unabated until the Office of Fair Trading finally stepped in to the fray 15 months ago with a damning report.
The OfT uncovered evidence of widespread irresponsible lending among leading players in the market and moved to put 50 of the biggest players in the sector on notice to clean up their act or face the consequences.
Within three months, 19 firms had disappeared around 40% of the biggest businesses in the market.
Since that moment, the headlines generated by the payday firms have been uniformly negative.
Even Archbishop of Canterbury Justin Welby threw in his tuppence worth by saying the Church of England was committed to competing the payday profiteers out of existence by encouraging the expansion of credit unions as a viable alternative.
But the barrel was well and truly scraped this week by Wonga one of the largest and most high-profile of all payday lenders when it was revealed it had used fake legal letters from made-up law firms to put pressure on lenders to settle their loans.
Around 45,000 people were sent the seemingly legitimate demands from legal practices such as Chainey D’Amato & Shannon over almost two years.
Wonga has now apologised unreservedly for its sins and is rightly paying a total of £2.6 million in compensation.
In my eyes, the Wonga case alone would be enough to justify the new crackdown on the sector which came into force yesterday. The new Financial Conduct Authority rules mean that loans cannot be rolled over more than twice, and no more than two attempts will be allowed to claw cash out of a customer’s bank account before a flag is raised.
Other restrictions and innovations, including a possible cap on the overall cost of a payday loan, that will serve to open up the market to greater competition and scrutiny will follow.
I am not suggesting payday loan companies should be outlawed or do not have a role to play in modern society.
But where cash is being dispensed to vulnerable and, in some cases, desperate people, it must be done in an appropriate manner under the terms of robust legislation.
Hopefully, the new regulations which came onstream this week will provide an effective curb to the endless hamster wheel of debt many borrowers find themselves on.
There is no doubt the payday sector has significantly cleaned up its act in recent years but there is still a way to go before the excesses of the past can be forgiven and forgotten.