View more on these topics

FCA gets new powers to cap payday costs

Chancellor George Osborne has toughened up the regulation of payday lenders by handing the FCA new powers to cap overall costs. 

The FCA will regulate the sector from next April with powers to cap interest rates as well as curbing advertising and debt collection techniques.

Osborne decided to go further last week and allow the regulator to put a cap on how much customers pay overall, including arrangement fees and penalty fees.

The Government will amend the Banking Reform Bill and the level of the cap will be decided by the FCA.

Speaking to the BBC, Osborne said: “We have got to look at all the other things that go into a loan: the arrangement fees, the penalty fees if you fail to pay the loan, the rollovers, the continuous payment authority, the money coming out of accounts without people knowing.” 

Earlier this month Liberal Democrat peer Lord John Sharkey tabled an amendment to the Banking Reform Bill to create a maximum £300 payday loan.

Labour leader Ed Miliband has called for a tax on payday lenders and a ban on advertising during children’s programmes.

Which? executive director Richard Lloyd says: “We are pleased the Government is committed to taking tougher action on payday loans by capping the sky-high fees and charges that drag people down in a spiral of debt.


“This will need to be part of a wider clean up of the credit market. The Government and the FCA must clamp down on irresponsible lending and excessive fees across the board, whoever the lender.” 

Recommended

Private banks are loosening AUM rules to attract more HNW clients

Mortgage brokers say private banks have started to loosen criteria relating to assets under management in a bid to attract more high net worth borrowers. Private banks usually seek to attract high net worth borrowers alongside a significant amount of AUM. For very wealthy individuals, such as those with over £10m in assets, the AUM […]

Lloyds-Banking-Group-640.jpg

Distributors back Lloyds’ quality move but call for increase in proc fees

Major distributors have reiterated calls for lenders to increase proc fees after it was revealed Lloyds Banking Group would introduce quality-based remuneration from next month. Mortgage Strategy revealed the lender would switch to quality-based proc fees in September, a year after revealing it was considering the idea. Then last week the lender revealed it would […]

Chasers face 10% regulatory fees hike as MoJ steps up scrutiny

Claims management companies are facing a 10 per cent rise in regulatory fees as the Ministry of Justice steps up its scrutiny of the sector. The MoJ, which regulates claims management firms, earlier this month published proposals for stricter rules for claims firms which aim to crack down on speculative claims and irresponsible practices. It […]

Wales to launch Help to Buy in January

Wales’ version of the Help to Buy equity loan scheme will launch in January. Last week, housing minister Carl Sargeant announced the £170m scheme, called Help to Buy Cymru, will support the purchase of around 5,000 new homes in Wales during the next two and a half years. Sargeant says: “The Help to Buy – […]

Newsletter

News and expert analysis straight to your inbox

Sign up