Rough Timeline For Payday Loan Legislation & Regulation Changes

Rough timeline for payday loan ра legislation & regulation changes In June 2010, the OFT published a "review of high-cost credit."* In this report they concluded that changes could be made to the industry itself, but that "more radical approaches would be required if the Government or others wanted to tackle the wider Hence, this was 'strong words' rather than concrete laws & regulations social, economic and financial context in which high-cost credit markets exist." In 2014, things took a big turn. The FCA took over the OFT/FSA's responsibility of regulation of the payday loan industry & introduced a whole host of regulations. These came in 2 phases: April 2014 & January 2015 April 2014? -FCA took over from OFT & imposed regulations to 1) "to ensure that firms only lend to borrowers who can afford it" 2) "to increase borrowers' awareness of the costs and risks of borrowing unaffordably and ways to get help if they have financial difficulties" Only be able to roll over your loan twice before the balance will be due In January 2015, the caps came into play Lenders will be limited to only two failed CPA attempts (Lenders can't continually try to withdraw money from your account when you don't have the funds available, and instead will need to contact you to find out what's going on) Interest and fees capped at 0.8% a day Payday lenders limited on how much they can collect: payday lenders will only be able to take payment via CPA if have enough money in your Total cost of a loan limited to 100% you account to cover the full amount you owe them; they're no longer able to take part payment (Lenders can't empty your account if you haven't got enough money to repay them in full) of original sum Default fees capped at £15 If lenders find you have insufficient funds in your account they'll still only be able to try to take payment twice £ FCA took over regulation of consumer credit from FSA. Drafted in July 2014, finalised in January 2015 "All payday companies will have to clearly display a new risk warning which is: "Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk". This must be displayed on all " "electronic communications"" from 1st ! II II April, 2014 and within ""non-electronic media"" from 1st July, 2014. As a result of these changes, the FCA predicted "lenders will lose II II Number of loans & amount borrowed has dropped by 35% in the 5 months after the FCA took over II II Payday lenders will now have to provide you with information about how to get free debt advice before you refinance or roll-over a loan. 70,000 borrowers (7% of payday)"³ The FT stated: "99 per cent of the UK's 400 payday lenders will be forced to shut down when its cap on the cost of credit comes into effect" 4 Paraphrased, that Wonga would be one of only 4 competitors left. 1. http://webarchive.nationalarchives.gov.uk/20140402142426/http://www.oft.gov.uk/shared_oft/reports/consumer_credit/High-cost-credit-review/OFT1232.pdf 2. http://paydayloans.money.co.uk/payday-loans-the-new-rules-for-lenders.htm 3. http://www.theguardian.com/money/2014/nov/11/payday-loans-caps-fca 4. http://www.ft.com/cms/s/0/11465030-4af7-11e4-b1be-00144feab7de.html#axzz3jw4LK9Q2 SwiftMoney www.swiftmoney.com