Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk
The Financial Conduct Authority (FCA) have put into place rules which will ensure that people using payday lenders or provide of high-cost short-term loan will not have to pay back any more than double the amount of the amount which was originally borrowed.
The FCA’s chief executive officer, Martin Wheatley said:
‘I am confident that the new rules strike the right balance for firms and consumers. If the price cap was any lower, then we risk not having a viable market, any higher and there would not be adequate protection for borrowers.
‘For people who struggle to repay, we believe the new rules will put an end to spiralling payday debts. For most of the borrowers who do pay back their loans on time, the cap on fees and charges represents substantial protections.’
The proposals for a payday loan price cap were published by the FCA.
The following price structure cap will not be modified, these are:
Today, a borrower will never have to pay back more than double the initial loan amount. As an example, anyone borrowing £100 over 30 days will never have to repay more than £24 in fees and charges for each £100 borrowed.
Price cap consultation, further analysis
Many professional bodies, consumer groups, academics and various stakeholders were consulted by the FCA on the proposed price cap and they estimated that around 10 to 11% of borrowers who had relied on short borrowing would be affected as they would no longer have access to credit of this type.
FCA actions resulted in a significant drop within the initial 5 months of the consumer credit regulation and the number of short term loans fell by almost 35%. Since then the FCA have conducted further studies after having access to more data they determined that 7% of current borrowers would be affected due to payday loan business exiting the marker.
The 7% equates to around 70,000 people. These people would have been the ones worse affected had they been granted a loan in the first instance under the old system, this is one example where the price cap will protect the most vulnerable in our society.
Initial cost cap
Total cost cap
Debt management agencies are regulated by The Financial Conduct Authority
Many people in the U.K struggle with debts and many do not know how to start to repay them speaking to a debt advisor is one of the best things you will do along with taking action yourself by speaking directly with your creditors.
https://www.nationaldebtline.org/ and https://www.moneyadviceservice.org.uk
You should always seek professional advice when handling debt problems. Cashute are not licensed debt advisers and any information contained in this article should not be taken as legal advice. It is your Responsibility to seek out correct legal advice