PAYDAY lender The Money Shop is considering the closure of up to 200 of its 500 branches.

As many as 350 staff could be made redundant out of a total of around 3,000 employed by Money Shop.

Tighter regulation has hit profits across the payday lending sector.

The company hopes to keep compulsory redundancies down by finding new roles for staff. It has already closed about 40 stores.

Money Shop's cutbacks follow the introduction by the Financial Conduct Authority this month of a cap on the costs of loans made by payday lenders.

Payday loan rates are now capped at 0.8 per cent per day of the amount borrowed.

In total, no one will have to pay back more than twice what they borrowed, and there will be a £15 cap on default charges.

Owners Dollar Financial said it had informed employees of the plan, which involves joining its online and retail business.

"Regrettably, it is possible that some 350 redundancies may be necessary as the company evolves its business to serve customers in a fair and sustainable way following the introduction of the new regulations on consumer lending, as well as removing duplication of facilities inherited through previous acquisitions," it said.

"We fully acknowledge the impact these proposals may have on our people both personally and professionally and we will support affected employees through this process and into future employment."