Campaigning works - Payday loan charges cap takes effect

With a cap on the cost of payday loans enforced by the City regulator has now come into effect, then we know that the Government will apply robust regulation.  Payday lending is an emotive subject - thousands of workers watching their jobs go as their solvent company is  closed so that a pack comprising the the assset based lender, their preferred IP and filth lawyers can gorge on the assets of the company.

Payday lenders have been subject to various new regulations

Payday loan rates will be capped at 0.8% per day of the amount borrowed, and no-one will have to pay back more than twice the amount they borrowed.

The Financial Conduct Authority (FCA) said those unable to repay should be prevented from taking out such loans.

Many payday lenders have already closed down, in anticipation of the new rules, a trade body has said.
And the amount of money being lent by the industry has halved in the past year.

Christopher Woolard, of the FCA, said the regulator had taken action because it was clear that payday loans had been pushing some people into unmanageable debt.

"For those people taking out payday loans, they should be able to borrow more cheaply from today, but also we make sure that people who should not be taking out those loans don't actually get them," he said.
Loan sharks
 
The changes mean that if a borrower defaults, the interest on the debt will still build up, but he or she will never have to pay back interest of more than 100% of the amount borrowed.
There is also a £15 cap on a one-off default fee.


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