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Scale of loan charges from payday lenders could be capped

Payday loan companies could find they have their interest rates capped following an agreement to amend the upcoming Financial Services Bill.

Firms such as QuickQuid, Wonga and Payday UK currently charge annual interest rates of around 4,000 per cent, which can force vulnerable people into a downward spiral of debt as they cannot afford to pay off the loan charges.

However, the government has announced that the Financial Conduct Authority (FCA) will have the power to cap these interest rates thanks to the Financial Services Bill amendment.

The move was announced by Treasury minister Lord Sassoon, after it was put forward by shadow business minister Lord Mitchell. It was backed by peers such as Lord Welby and Baroness Grey-Thompson.

"We need to ensure that the Financial Conduct Authority grasps the nettle when it comes to payday lending and has specific powers to impose a cap on the cost of credit and ensure that the loan cannot be rolled over indefinitely," said Lord Sassoon.

Amir Hussain
Amir specialises in personal loans, consumer debt and debt management.ADNFCR-2776-ID-801500021-ADNFCR

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