.......to result in complete overhaul of sector with stringent new controls on lenders

The third major investigation into payday lending in less than two years will be launched next week and is expected to result in a complete overhaul of the sector with stringent new controls on lenders. The new Financial Conduct Authority will conduct the probe amid growing fears that the money lenders – dubbed ‘legal loan sharks’ by some MPs – are out of control and encouraging hard-up consumers to sink into irreversible debt. The FCA is expected to examine the possibility of capping loans, placing restrictions on the number of times a loan can be rolled over into a larger one and look at whether lenders are consistently failing to properly assess the ability of borrowers to repay debts.

Sources expect the investigation to lead to a major reworking of the Consumer Credit Act. The FCA will be getting involved just weeks after the Office of Fair Trading completed its main review of the payday market which began in February last year and led to the sector being referred to the Competition Commission. The OFT’s investigation revealed that all 50 of the biggest lenders were failing to comply with laws designed to stop vulnerable consumers falling into debt. About 20 of those lenders pulled out of the market as a result.....Read more here