FCA places caps on payday lender charges

The Financial Conduct Authority (FCA) has announced its plans to put in place a cap on how much payday lenders can charge their customers. This will become effective as of January 2015.

Earlier this year the FCA said that, in response to growing concerns, they would begin to closely scrutinise the way in which payday lenders recoup debts from customers.

Their plan is to limit payday loan rates to 0.8% per day and also limit the total cost cap to 100%. The latter measure will ensure that no borrower ever repays more than double the amount they were lent.

Martin Wheatley, chief executive of the FCA, said: "For many people that struggle to repay their payday loans every year, this is a giant leap forward."

The 0.8% will mean that no borrower will pay more than £24 back per £100 they borrow. As it stands, The Money Shop charges £29.99 for a 30-day loan of £100, whilst Wonga charges £37.15.

The FCA has said that the average borrower will save just short of £200 per year as a result of these measures, whilst payday lenders could collectively lose up to £420 million per year.

The Consumer Finance Association (CFA) has said that it predicts the payday loan industry will shrink considerably over the next few years as a result of the FCA's tightening of regulations.

The CFA also believes that lenders will now be more selective with regards to who they lend to; as there will be a cap on how much they can charge, payday loan companies are more likely to shy away from lending to riskier customers.

Russell Hamblin-Boone, the CFA's chief executive, commented: "Many more people will be turned down for loans from reputable lenders."

Make sure you hire conscientious credit control staff

Our experienced recruiters will be able to find you candidates for your credit control vacancies who will possess all the necessary skills to carry out the role effectively.

We are of course able to offer you any recruitment advice you may need when it comes to hiring your credit control staff, as we have a great deal of experience in recruiting for such roles.

View Our Resources

Stand out when applying for sales ledger jobs

A Sales Ledger ensures that a company's finances are kept in check, and that everything is invoiced ...read more

Sales Ledger Assistant

As part of the credit control department, sales ledger assistants are important components in a...read more

Senior Credit Controller Job Vacancies

If you are looking for a new position in a Senior Credit Controller capacity, we can help you find a...read more

Debt Recovery Chief Critical of Cable’s Late Payment Levy

Business secretary Vince Cable has suggested a ‘late payment levy’ to tackle the pr...read more