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FCA to set out cost of payday loan charge cap

The FCA is set to impose a cap on charges by payday lenders of around £30 for each £100 borrowed, according to the Financial Times.

The regulator has said it will consult on a cap on payday lender charges, a move confirmed earlier this year. It is also carrying out a full thematic review of the sector. 

Its consultation will set out proposed rules for a charge cap, with a implementation planned in early 2015.

In February the FCA introduced new rules including limiting the number of times a payday lender can rollover loans to two, and restricting the number of times a firm can seek repayment using a continuous payment authority to two.

It said at the time it would consult on a charge cap in the summer.

Payday lenders have come under increased pressure recently.

Last week the Financial Ombudsman Service released new statistics showing the number of complaints about payday lenders had rocketed, warning it was only the “tip of the iceburg”.

The figures came after the FCA announced payday lender Wonga would pay £2.6m in client redress after it sent out letters from fictitious law firms demanding debt repayment.


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There are 8 comments at the moment, we would love to hear your opinion too.

  1. £30 – half a days work for those on minimum wage? I despair.

  2. If this will mean an APR capped at 30% it accords pretty much with what I suggested many moons ago, namely an APR of no more than twice the average charged by 10 of the UK’s leading credit card companies.

  3. Is that for a day, a week or what ?

  4. @ Paul

    Hahahaha !! don’t be silly by the hour !!!

  5. A scary lack of understanding by the blogerati of what “total cost of credit” means and how that interacts with APR. Some of you at least are supposed to be financial advisers…

  6. The article is unclear on the point, so we don’t really know do we ???

  7. The original article in the FT is more specific:

    “This will be a cap on the total cost of credit, rather than just the annual percentage rate, so it is likely to include limits on fees and charges as well as interest rates.”

    This accords with the Australian model which it seeks to largely emulate.

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