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FCA limits payday lender rates
THE FINANCIAL Conduct Authority (FCA), the UK’s financial regulator, announced a cap yesterday on the amount payday loan companies can charge.
Coming into force on 2 January 2015, the new rules put a 0.8 per cent cap on the daily cost of borrowing, limit fixed default fees at £15 and confine the total cost of borrowing at 100 per cent.
The FCA published its proposals for the cap in July. Following a consultation period, the price cap structure and levels have remained unchanged.
The FCA estimates that the effect of the price cap would be that seven per cent of current borrowers – approximately 70,000 people – would no longer have access to payday loans after the new rules come into force.