Consumer Council and NICVA welcome the Financial Conduct Authority’s price cap on payday loans
The Consumer Council and NICVA have welcomed the Financial Conduct Authority’s (FCA) announcement on price cap measures to be introduced on payday loans from 2nd January 2015.
Speaking about the announcement, Aodhan O’Donnell Interim Chief Executive at the Consumer Council said; “The new rules confirm the proposals made by the FCA in July, and will mean that no consumer will have to pay back more than twice what they originally borrowed.
“Consumers need to be given clear information on the total cost payable before they decide to take out a payday loan, so that they fully understand the pros and cons. These measures need to be taken alongside other remedies to protect the most vulnerable and financially excluded consumers; as such we expect the regulator to closely monitor these changes and strengthen them as necessary to ensure that the market is working well for consumers.
Aodhan concluded “Our recent Consumer Outlook research shows that 40 per cent of consumers in NI admit to struggling to keep on top of bills and regular commitments; having access to quick finance is an essential part of everyday life for many people. It is important that this consumer need is balanced with responsible lending from payday lenders, and a cap on charges would help eliminate some of the heavy penalties consumers face when having difficulty repaying outstanding payday loans.”
Lisa McElherron, Head of Public Affairs at NICVA said, “We welcome the cap on fees for payday loans and hope that it will help people forced to take out a payday loan not fall further into debt. However, we know that many people are struggling to make ends meet and need access to credit to meet unmanageable or unplanned expenses. The last thing we want to see is people having to turn to unlicensed money-lending, or loan sharks. That’s why NICVA is working with a range of agencies to explore a Northern Ireland accessible credit scheme.”
The Consumer Council has developed an ‘Understanding Payday Loans’ guide to help consumers get to grips with how payday loans operate and the costs associated with this type of borrowing. This is available to download from the Consumer Council’s website www.consumercouncil.org.uk along with ‘Thinking about borrowing money – your guide to different types of credit’ or by contacting the Consumer Council on 0800 121 6022.
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