The Financial Conduct Authority, which will take over responsibility for the regulation of the consumer credit industry in April next year, has published its plans to provide better protection for consumers. Payday lenders will face tighter rules on how they advertise, who they lend to and how they obtain payment from their clients.
Payday lending firms will be forced to carry out affordability checks before offering a loan and their adverts will include a warning about the risks involved. In addition, borrowers will not be able to ‘roll over’ a loan more than twice. Lenders will also be banned from using ‘continuous payment authorities’ more than twice to attempt to collect the loan at the end of the agreement.
Whilst I welcome the FCA’s efforts to clean up the payday loans industry, these measures do not go far enough to make a real impact. In particular, there is no mention of curbing the extortionate rates of interest that are charged by these firms and the Government needs to address this issue immediately. In addition, the limited measures announced today won’t come into force until April 2014 and the FCA has said that they won’t actually enforce them for a further six months after that, so consumers may not see the benefit of these minor improvements until October next year. How many more families will end up in a spiral of debt before the Government takes real action?
I am often approached by people who have carried on borrowing – long after they should have asked for help – and have run up high levels of debt as a result. The good news is that there are things that can be done to cope with unaffordable credit. My rule of thumb is, if you can’t afford the bills and credit commitments that you’ve already got, it’s time to stop borrowing and ask for help.
To find out about all the options for dealing with unaffordable debt, call me and my team on 01709 331300. We can help.