Tough new payday lending rules put forward by the Financial Conduct Authority (FCA) are a clear signal to the payday lending market that they need to get their houses in order, Treasury minister Sajid Javid has said.
The new rules state that a loan can be rolled over no more than twice, and lenders must signpost borrowers to debt advice at a rollover.
The FCA has the powers to take strong, bold action to protect borrowers.
Its announcement sets out robust new standards for the industry, demonstrating that the FCA is prepared to be tough and decisive in defending consumers’ interests when it comes to payday lending.
The announcement supports the government’s commitment to strengthen the way the lending market is regulated.
Economic Secretary to the Treasury Sajid Javid said:
These rules are a clear signal to the payday lending market that they need to get their houses in order now. We set the FCA up to put consumers first and these rules do that. Payday lenders now know what the FCA expects of them and will have to comply or face tough sanctions.
The government wants to see financial rules that protect hardworking people from sharp practice in the financial sector.
On April 1 2014, responsibility for consumer credit regulation will transfer from the Office of Fair Trading to the FCA.
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