FCA warns pay day lenders “we will take you out” …
As of today the Financial Conduct Authority (FCA) have taken over the regulation of credit providers and debt management firms from the Office of Fair Trading – and have warned that it will “take out” pay day lenders who do not follow stricter new rules.
The FCA want to deal with extortionate charges and the danger of borrowers being pushed further into a cycle of debt – as well as taking over the regulation of credit cards, hire purchase, debt management firms and debt advisers.
Martin Wheatley, chief executive of the FCA, told BBC Radio 5 live :
“Our processes will probably force about a quarter of the firms out of the industry, and that’s a good thing, as those are the ones that have poor practices.
However the trade body for payday loan firms, the Consumer Finance Association, have told the BBC that driving out payday lenders will not stop demand;
“The demand is there,”
Mr Hamblin-Boone of the CFA said.
“Without such lenders, people would be forced to take loans from “less reputable” sources.”
“With all the scrutiny the industry has been under for 18 months people are continuing to take out these loans and pay them back and not have a problem.
“If we continue to drive up standards this can only be good for business.”
The FCA now has tougher powers than the Office of Fair Trading, including unlimited fines, ordering refunds and banning misleading advertisements and they have made clear that payday lenders will be closed down if they do not comply with its new rules.
These regulations include limiting the number of times a customer can rollover a loan, improving affordability checks, and controlling attempts to extract repayments from borrowers’ bank accounts.
This can only be good news for both Landlords and Tenants alike – as at LRS we still hear from too many landlords who’s tenants have gotten into arrears due to pay day loans and their extortionate interest rates.
- Have you ever taken out a payday loan?
- What was your experience?
- Have you ever considered using a Credit Union?
LRS Landlord Quote:
“What about recommending CU’s as they don’t charge fees and would help tenants to eventually obtain cheaper loans.
Doing it that way you could have a SO from the CU to pay you and avoid any ‘clawback’ issues!”
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