Payday lending is here to stay - Sam Bowman writes for the CityAM Forum

The Adam Smith Institute's Research Director, Sam Bowman, argued that payday lending is here to stay in the CityAM Forum debate: 'As Wonga profits slide, will regulatory pressure squeeze payday lenders out of the market?'

Regulation is tightening, and Wonga may be losing ground, but payday lending looks here to stay.

Payday lenders perform a useful function: giving people emergency credit with few questions asked in a short space of time.

This comes with sizeable interest: a 30-day loan of £100 from Wonga costs £37.15.

But these loans are so expensive precisely because they are so easy to access. It’s good that such loans exist, but it’s also inevitable that the people who go for them will be the ones with the fewest alternative options, and hence will be the easiest to exploit.

Wonga’s unscrupulous behaviour – sending fake legal threats to customers – is being punished, and a more competitive marketplace might see rivals squeeze the firm out of business altogether.

Just so. But Wonga’s failings should not tarnish the whole industry which, in the end, is answering a very real and important demand.

Read the full debate here.