From the FCA press release - click link for full info.
People using payday lenders and other providers of high-cost short-term credit will see the cost of borrowing fall and will never have to pay back more than double what they originally borrowed, the Financial Conduct Authority (FCA) confirmed today.
The FCA published its proposals for a payday loan price cap in July.
The price cap structure and levels remain unchanged following the consultation. These are:
- Initial cost cap of 0.8% per day - Lowers the cost for most borrowers. For all high-cost short-term credit loans, interest and fees must not exceed 0.8% per day of the amount borrowed.
- Fixed default fees capped at £15 - Protects borrowers struggling to repay. If borrowers do not repay their loans on time, default charges must not exceed £15. Interest on unpaid balances and default charges must not exceed the initial rate.
- Total cost cap of 100% - Protects borrowers from escalating debts. Borrowers must never have to pay back more in fees and interest than the amount borrowed.
From 2 January 2015, no borrower will ever pay back more than twice what they borrowed, and someone taking out a loan for 30 days and repaying on time will not pay more than £24 in fees and charges per £100 borrowed.
So what do people think? Is this enough to kerb the likes of Wonga? Will this force Wonga to adopt a new business model as this must impact potential revenue?
Does it do enough to safeguard the vulnerable?
