FCA confirms new rules for payday lenders
The Financial Conduct Authority (FCA) has this morning confirmed the new rules it's imposing on payday lenders and debt management companies.
The rules respond to persistent calls from government and third sector groups to regulate the industry and drive out unscrupulous lenders.
The clampdown on the consumer credit market, which is worth £200bn a year, will see it subject to mandatory affordability checks for payday borrowers, with the regulator having the power to ban adverts it deems misleading.
Chief executive of the FCA, Martin Wheatley, said:
Millions of consumers access some form of credit each day, from paying for everyday goods by credit to taking out a payday loan. We want to be sure that the market works well when people need it – whether that’s for one day, one month or longer.
The changes include limiting the number of loan roll-overs to two and retricting the number of times a firm can seek repayment using a continuous payment authority (CPA) – also to two.
It'll be a requirement for businesses to provide information to customers on how to get free debt advice, and those dealing with debt management will be obligated to hand over more money to creditors from day one of a debt management plan.