The new government watchdog has hinted that it will not put a cap on the interest rates of payday loans because consumers could be 'worse off'. In a report published yesterday the Financial Conduct Authority (FCA) said that restricting choice for consumers could mean that some are unable to get credit entirely, causing a far greater problem. Payday loans have been criticised for trapping customers into a spiral of debt with their sky high interest rates – sometimes up to 4,000 APR. Last year, the government accepted a change to the Financial Services Bill to give the FCA new powers to cap interest rates and restrict the availability of payday loans from April 2014. However, yesterday's report signaled that the FCA may not use these powers to regulate the industry in such a way. It came in a report on 'behavioural economics' which the regulator said it will take into consideration when identifying areas it should look at....Read more here

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Ed Miliband vows to block payday lenders - allaboutFORUMS