The Government announced yesterday that it would be capping the costs charged by payday loan companies in a bid to help people with the cost of living.
The Financial Conduct Authority (FCA), the industry’s new regulator, will cap the costs companies charge their customers to help make repayments more manageable.
The cap will be included in the Banking Reform Bill, which is already going through Parliament, and will include controls on charges, including arrangement and penalty fees, as well as on interest rates.
It’s important that we have a responsible payday loan industry that’s on the side of hardworking people, protecting customers from overcharging and exploitation. Charging thousands of percent interest does nothing but leave people trapped in a cycle of poverty, so I’m pleased that the Government is taking action to help those most in need.
The last Labour Government did nothing to address this problem, though to be fair a number of Labour MPs – most notably Stella Creasy – have campaigned for action since 2010. It’s good to see this Government standing up for hard-working people.