UK Notes

Christian charity welcomes new payday lender rules

Tue 15 Jul 2014
By Sarah McAllister

Christians Against Poverty says new laws that will stop pay day loan companies charging huge rates of interest will not drive people to use loan sharks.

The Financial Conduct Authority (FCA) says a cap on interest and fees will be introduced from January.

The overall cost of a loan will never exceed 100% of the amount borrowed - protecting consumers from escalating debt.

The FCA has accepted the new rates could mean some customers will no longer be able to access the loans they previously did.

There's concerns this will force some people to use illegal lenders.

But Matt Barlow, CEO of Christians Against Poverty, told Premier's News Hour he doesn't think that will happen: "I was very encouraged by the research that the FCA had done around people that had be turned down for pay day loans.

"It showed less than 5% of people who couldn't get a pay day loan even considered getting an illegal loan." He said.

The proposals should offer more protection to customers who can often end up paying rates of more than 300% pa.

The FCA wants rates capped at 0.8% a day.

Fewer loans have been issued since July 1 when payday lenders were given new rules which included forcing them to carry out more affordability checks.

Listen to CEO of Christians Against Poverty Matt Barlow speaking on Premier's News Hour:

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