New Payday Loan Rules Come Into Force
New rules that came into force on in the UK to limit payday lenders to two so-called “rollovers” – a common practice where loans are extended and fees charged if a customer fails to repay. They also ban providers from attempting to take missed payments direct from customers’ bank accounts or credit cards on more than two occasions.
Payday lenders will also now have to include the risk warning: “Late repayment can cause you serious money problems” on all television and radio advertisements. They are the first changes to hit the payday sector since the Financial Conduct Authority took over regulation of consumer credit in April. It is part of a broader shake-up of payday lending, which was until this year subject to relatively loosely controlled regulation by the Office of Fair Trading.
The FCA is preparing to outline the structure of a new cap on the cost of credit later this month. The cap, which was demanded by the UK government last year, is expected to drive many operators out of an already shrinking market.
Source: Financial Times