|Topic:||Re:Secrets from the Clink|
|Posted by:||Sam Hearn|
|What a good job then that the Government has done something about it.|
See below an extract from The Guardian 1st April 2014
"Half of all payday lenders could choose to close rather than adopting tough restrictions imposed by the sector's new watchdog, a trade body has claimed.
On Tuesday, the Financial Conduct Authority (FCA) took over regulation of 50,000 consumer credit firms, from credit card providers to lenders offering high-cost short-term borrowing on the high street and online.
The FCA has already outlined new restrictions on payday lenders, set to come into force in July, which will limit the number of times loans can be rolled over and how often firms can unsuccessfully attempt to collect repayments from borrowers' bank accounts.
It has also said it will take a close look at how borrowers are treated if they are unable to meet their repayments, and has been tasked by the government with devising a cap for the total cost of credit. It will visit the five biggest lenders to check that the new rules are being implemented.
Lenders in the sector often charge interest rates in excess of 5,000% APR and although they say borrowing is designed to be over a short period and cheaper as a result, costs quickly add up if a repayment is missed or a loan is rolled over."
Previously the regulator has suggested that a quarter of firms could leave the market after the new rules come into force; some have already pulled out of the business since being told to clear up their act 12 months ago.
The Consumer Finance Association, which represents 12 payday lenders making up 60% of the £2bn industry, said the new rules and a cap on costs could encourage up to half of firms to leave the market.
The CFA's chief executive, Russell Hamblin-Boone, said: "No other credit market has faced such intense scrutiny in the past year.
"If the new FCA rules are applied fairly and the regulator targets the worst practices not just the best known lenders, many more businesses could be driven out of the market."
|Topic||Date Posted||Posted By|
|Secrets from the Clink||14/08/14 10:48:00||Vanessa Smith|
|Re:Secrets from the Clink||14/08/14 18:04:00||Sam Hearn|