The Financial Conduct Authority has now officially taken control of the often controversial payday loans sector. The FCA precedes the old authority the Office of Fair Trading.
Observers and politicians, such as Stella Creasy, have long pronounced the regulation of the industry as â€˜under regulatedâ€™ and â€˜inadequateâ€™. It will be hoped by these individuals that the new regulators will take a tougher stance to a ever growing market.
The main objective the FCA will be tasked with is to tackle high charges in the form of spiralling â€˜roll-overâ€™ amounts borrowers are exposed to. This takes the form of what are in essence charges levied monthly for failure to repay the loan amount, without actually ever paying the loan back.
This is the complete opposite of how these â€˜same day cash loansâ€™ are marketed, as the high charges associated with the loan are only meant to exist for a one-month cycle and not recurrent months.
James Rice from the payday loans website www.CushteeCash.co.ukk points out this flaw;
â€œIt is true that lenders take advantage of the fact that some borrowers do not pay back their full loan amount on the agreed date, and instead just pay the interest.â€
â€œWhen this happens the borrower is in fact paying â€˜Xâ€™ amount of charges instead of the one time interest fee. This can multiply the charges the customer is then paying when the loans are sold as a flat one-off charge.â€
The Financial Conduct Authority has warned all payday lenders in the UK that it will deal swiftly with those in the industry that fail to meet stiffer rules.
It has been reported that this could wipe out at least a quarter of fast loan lenders that are currently operating on the fringes of what the FCA will see as acceptable.
The new rules will be looking at the borrowers lenders approve and ensuring only those that can afford to repay on time are being lent to.
Mr Rice agrees with this move;
â€œFor too long payday lenders were accountable to only themselves, this is a step in the right direction.â€
Cushtee Cash utilises a panel of the best payday lenders in the UK to ensure that customers get the best deal and the fastest loan possible.
For Media Contact:
Contact: James Rice, Head of Marketing
90 De Beauvoir Rd,
London N1 4EN,
Tel: 0333 003 0068