The City watchdog this week promised to “take out” rogue payday lenders. The Financial Conduct Authority was given responsibility for the high-cost credit sector from Tuesday, and chief executive Martin Wheatley immediately started talking tough.
“Parts of this industry are offering loans without doing any affordability checks and loading costs on to people who simply can't afford to pay – and that's the part of the industry we want to take out,” he said.
The watchdog has already published new restrictions on lenders – which charge up to 5,000 per cent APR – that come into force in July. The number of times loans can be rolled over will be limited to two, for example, as will the number of times firms can use continuous payment authorities, which allow lenders to raid borrowers' bank accounts.
But Jeff Cuthbert, the Welsh Assembly's Tackling Poverty Minister, demanded more: “We need to warn people of the dangers of payday loan firms that can trap people into an escalating circle of debt if they find that they cannot meet the repayments,” he said.
Citizens Advice chief executive Gillian Guy called for instant action against rogue firms: “Consumers need a fair market, not one that exploits them. Lenders breaking the rules should be immediately thrown out of the market.”