The Treasury is calling on banks to pick up payday loan borrowers after the FCA imposed a cap on interest rates.
The Financial Times reports a letter from the Treasury has been sent to major banks and the British Bankers’ Association in recent weeks urging them to raise awareness of services that might be used by payday loan customers.
From January payday loans will be capped at 0.8 per cent interest per day while borrowers will never need to repay more than twice the value of the loan.
The tough changes have led to fears payday lenders could be put out of business and leave a section of the market under-served.
The FCA estimates the market will shrink by 7 per cent under the new rules with 70,000 fewer payday loan borrowers.