Businesses such as Wonga, QuickQuid, Sunny and PiggyBank are some of the most regulated and persecuted firms in the UK, but still manage to survive and do business.
Fuelled by the desire from consumers for short-term credit injections, lenders such as Wonga have proliferated the finance market faster than any kind of bank could ever hope to.
This journalist was on the editorial staff at a magazine that profiled Wonga, and its enigmatic co-founder Errol Damelin, at the height of its power exactly four years ago. Back then, Damelin compared his business to the likes of tech heavyweights Google, Amazon and Facebook all services that addressed a basic consumer need .
The company had recently been charged with another round of venture capital, this time 73m from the likes of Oak Investment Partners and Wellcome Trust, and was being heralded as one of the growing British businesses that would one day go on to have a mega IPO.
Fast-forward four years and it’s not quite such a rosy set of circumstances for Wonga. Gone is the slick PR engine that created its now infamous slider system and love or hate elderly TV advert puppets.
The firm has come under repeat attacks from both consumers and the powers that be in government, attempting to clamp down on lending practices that were seen as irresponsible. New regulation meant that the number of times a loan could be rolled over or extended was restricted, while firms could also not make more than two unsuccessful attempts to take cash from a customers bank account.
To compound that mystery,?Damelin left the companyin an effort by the board to rid the business of personalities associated with its rise to prominence as a fast-cash and few-questions provider.
There was also the slightly comical set of circumstances that saw the Church of England, and archbishop of Canterbury Justin Welby, first come out and pledge to put Wonga out of business by supporting credit unions, before having to make an embarrassing u-turn when it was revealed the Church was an indirect investor in the business through its commitment to a venture capital firm.
From its offices in Camden Town, where it shares a building with another 21st century British business favourite ASOS, Wonga has now had to make a big decision about where it goes from now.
Having written off million of the loans it had provided because they were deemed unsuitable , and paid compensation to those it sent fake letters to chasing debts, it is conducting an overhaul.
A first loss, and a 37.3m pre-tax one at that, is a watermark moment for the business and followed a 31 per cent dip in revenues for 2014.
The now two year-old Financial Conduct Authority (FCA) has taken a tough stance against so-called payday lenders. From 2 January 2015, no borrower will ever pay back more than twice what they borrowed, and someone taking out a loan for 30 days and repaying on time will not pay more than 24 in fees and charges per 100 borrowed.
This kind of regulation will undoubtedly hit the likes of Wonga hard. After all, it was the companys ability to recoup substantially more than it had first loaned out that saw it grow from startup to a venture turning over hundreds of millions of pounds in a few years.
Payday lenders also enjoyed a post-credit crunch society that had little disposable income but an ingrained shopping habit. Now that the economy has largely stabilised, unemployment is down, and wages are (slowly) beginning to rise, there are less people in need of short-term cash.
It can probably be said with some authority that Wonga will never go on to have that multi-billion pound IPO that everyone who backed the business had hoped for. But Wonga does now have an opportunity to create a new brand, and new lending offering. If it can prove to the general public, government and FCA that it is lending responsibly and not putting untoward pressure on borrowers, there might just be a future for it.
