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Even the doorstep lenders are suffering!

Markets have today been rocked by news that London Scottish Bank, one of the so-called doorstep lenders in the UK, has gone into administration after failing to raise sufficient finance to keep the business going. However, the Treasury has stepped in to confirm that all banking deposits with the group will be honoured even if they exceed the £50,000 compensation limit set by the financial services compensation scheme.

While London Scottish Bank had a number of traditional banking operations, it was perhaps best known for its doorstep lending subsidiary which provided an unsecured loans to members of the public who would ordinarily have struggled to raise finance. There has been some controversy over the years with regards to strategies and the high rates applicable to customers although the UK government had implemented a number of serious regulatory changes to combat such problems.

While the group had effectively been trading with limited capital adequacy levels since the start of the year, the financial services authority were well aware of plans to raise money via asset disposals. However, even after a number of substantial sales there is still a multi-million pound deficit and on Sunday the financial services authority withdrew the company's right to take deposits from customers.

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