Call us on 01254 263 885

Text "claim" to 83310

Request a call back

Tougher regulation to be expected for payday lenders

Today, the Financial Conduct Authority (FCA) has set out how it plans to regulate payday loan firms, when it takes on the responsibility of over 50,000 companies in 2014.

Despite the Office of Fair Trading (OFT) efforts to protect consumers from unscrupulous payday lenders, the FCA commented that the industry has failed to respond to the current regulator’s campaign.

Martin Wheatley, chief executive at the FCA said:

“Today I’m putting payday lenders on notice: tougher regulation is coming and I expect them all to make changes so that consumers get a fair outcome. The clock is ticking.”

Under the FCA plans, the regulator will be able to ban loans or adverts that are not deemed appropriate. Furthermore, the FCA is also looking to restrict the number of attempts a payday lender can take money out of a borrower’s account.

They have also reinforced the need to protect consumers by encouraging them to seek free debt advice if they wish to extend their loan.

Mr Wheatley said: “We believe that payday lending has a place; many people make use of these loans and pay off their debt without a hitch, so we don’t want to stop that happening. But this type of credit must only be offered to those that can afford it and payday lenders must not be allowed to drain money from a borrower’s account.”

The FCA has also said it will consider possible reimbursements for consumers who have fallen victim to rogue payday lenders.

The changes have been welcomed by debt charity StepChange, saying that the proposed new rules are a “crucial move towards a new era for consumer credit.”

According to Peter Tutton, head of policy at StepChange: “The current regulatory regime has left consumers inadequately protected against poor practice from the payday lending industry.”

Business Minister Jo Swinson said that the industry has “failed to self-regulate effectively” and that the new rules will “call time on unscrupulous payday lenders”.

The FCA will take over as the new regulator for consumer credit in April 2014.





Back to Business Legal News

Contact Lance Mason