Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • Former MSE Wendy
    • By Former MSE Wendy 14th Jul 14, 5:16 PM
    • 868Posts
    • 1,782Thanks
    Former MSE Wendy
    Has the FCA got the payday loan cap right? Have your say!
    • #1
    • 14th Jul 14, 5:16 PM
    Has the FCA got the payday loan cap right? Have your say! 14th Jul 14 at 5:16 PM
    The financial regulator has announced details of the long awaited cap on payday loans today and the CEO, Martin Wheatley, wants your views.

    Initial cost cap of 0.8% per day. For new loans, or loans rolled over, interest and fees must not exceed 0.8% per day of the amount borrowed.


    Fixed default fees capped at £15, which protects borrowers to repay. If borrowers cannot repay their loans on time, fees must not exceed £15.


    Total cost cap of 100%, which protects borrowers from escalating debts. Borrowers must never have to pay back more in fees and interest than the amount borrowed.
    He says he's confident the FCA has set the cap at the right level to protect consumers. What do you think?

    Do you think the FCA has struck the right balance?
    What do you think about people not being able to take out a payday loan as a result of a cap?

    Please reply with your thoughts below.

    If you haven’t already, join the forum to reply. If you aren’t sure how it all works, read our Forum Intro Guide.

    Read the full MSE News story: Guest comment: Have we got payday loan cap right?

    Last edited by Former MSE Wendy; 15-07-2014 at 6:54 AM.
Page 1
    • chanz4
    • By chanz4 15th Jul 14, 7:21 AM
    • 10,018 Posts
    • 2,981 Thanks
    chanz4
    • #2
    • 15th Jul 14, 7:21 AM
    • #2
    • 15th Jul 14, 7:21 AM
    Hello provident
    Don't put your trust into an Experian score - it is not a number any bank will ever use & it is generally a waste of money to purchase it. They are also selling you insurance you dont need.
    • shazzablue
    • By shazzablue 15th Jul 14, 7:32 AM
    • 143 Posts
    • 47 Thanks
    shazzablue
    • #3
    • 15th Jul 14, 7:32 AM
    • #3
    • 15th Jul 14, 7:32 AM
    Hello provident
    Originally posted by chanz4
    Hi chanz,how will this affect provident?,will they not find a way round any changes?.
    • Oblivion
    • By Oblivion 15th Jul 14, 7:37 AM
    • 19,247 Posts
    • 58,472 Thanks
    Oblivion
    • #4
    • 15th Jul 14, 7:37 AM
    • #4
    • 15th Jul 14, 7:37 AM
    The cap looks sensible to me. Fortunately I have never, nor ever will, have need of a payday loan but for those who do I'm sure it's a welcome move.


    The very thought of paying someone interest is anathema to me but then I am an orthodox tight@rse.
    ... Dave
    Happily retired and enjoying my 13th year of leisure

    I am cleverly disguised as a responsible adult.

    Bring me sunshine in your smile
    • bexster1975
    • By bexster1975 15th Jul 14, 7:38 AM
    • 1,377 Posts
    • 6,606 Thanks
    bexster1975
    • #5
    • 15th Jul 14, 7:38 AM
    • #5
    • 15th Jul 14, 7:38 AM
    Surely any cap is better than nothing. In an ideal world people would receive financial education and payday loans companies would be illegal. In the absence of this, a cap is a start.

    Bexster
  • michael1983l
    • #6
    • 15th Jul 14, 8:18 AM
    • #6
    • 15th Jul 14, 8:18 AM
    I believe 50% is a more realistic figure to protect consumers. Also they should think about halting these instant payments and put a 3 day minimum lead time on receiving the payment. Makes the customer think better about weather they really need the loan or not.
  • grahamji
    • #7
    • 15th Jul 14, 8:20 AM
    Apr ???
    • #7
    • 15th Jul 14, 8:20 AM
    Out of curiosity what is 0.8% daily as an APR ?????
    • dwrjones87
    • By dwrjones87 15th Jul 14, 8:29 AM
    • 18 Posts
    • 3 Thanks
    dwrjones87
    • #8
    • 15th Jul 14, 8:29 AM
    • #8
    • 15th Jul 14, 8:29 AM
    Out of curiosity what is 0.8% daily as an APR ?????
    Originally posted by grahamji
    According to my sums, compounded every day, borrowing £100 ends up at £1,818.17 by the end of the year, so that's still 1,818.17% APR
    • fermi
    • By fermi 15th Jul 14, 8:57 AM
    • 39,669 Posts
    • 47,650 Thanks
    fermi
    • #9
    • 15th Jul 14, 8:57 AM
    • #9
    • 15th Jul 14, 8:57 AM
    I'm a Board Guide on the Debt-Free Wannabe, Bankruptcy, Credit Cards and Loans boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Board guides are not moderators. If you spot an inappropriate or illegal post then please report it to forumteam@moneysavingexpert.com

    Free/impartial debt advice: National Debtline | StepChange Debt Charity | Find your local CAB

    IVA & fee charging DMP companies: Profits from misery, motivated ONLY by greed
  • FidgitsID
    Seems like a reasonable set of caps to me
    but its just fixing a symptom..
    So this will just quickly move the industry onto some other ways of lending money at high rates/silly risks :-(
    Last edited by FidgitsID; 15-07-2014 at 9:33 AM.
    • Pincher
    • By Pincher 15th Jul 14, 9:30 AM
    • 6,516 Posts
    • 2,491 Thanks
    Pincher
    Oops, there is a cap of £200 if you borrow £100.
    Last edited by Pincher; 15-07-2014 at 12:12 PM.
  • michael1983l
    Does this cap apply to those loans being offered by firms like Peachy and Sunny and Pounds2Pocket, where the loan is set out over a longer period, like 6 months but still at ridiculous interest rates. Do they count as a payday loan?
    • CKhalvashi
    • By CKhalvashi 15th Jul 14, 9:41 AM
    • 8,976 Posts
    • 25,696 Thanks
    CKhalvashi
    This seems very reasonable to me, perhaps too reasonable......
    "I kada sanjamo san, nek bude hiljadu raznih boja" (L. Stamenkovic)

    Call me Remainer or Romaniac, but not Remoaner. It's insulting and I have the right to have my voice heard too.

    I can spell, my iPad can't.
  • Apples2
    I'm sure they will already have ideas to combat this.

    Maybe not only do you apply for a loan, you also agree to become a member of the loan service, for £15 per month payable until the debt is cleared.

    At present it is a bit of a game with debts being passed onto DCA (made up names??) adding more fees and charges to a balance the debtor knew never could be repaid in the first place.
    Perhaps this will lead to much quicker CCJ's being issued than the current drawn out affair.
    • Tiny Tina
    • By Tiny Tina 15th Jul 14, 10:00 AM
    • 32 Posts
    • 6 Thanks
    Tiny Tina
    Total cost cap of 100%, which protects borrowers from escalating debts. Borrowers must never have to pay back more in fees and interest than the amount borrowed.
    Will this apply to all forms of loans? Including mortgages?

    I do hope so
    • Cornucopia
    • By Cornucopia 15th Jul 14, 11:11 AM
    • 11,899 Posts
    • 13,337 Thanks
    Cornucopia
    The wording of the 100% price cap is too vague.

    They need to specify that it covers rolled-up and rolled-over loans, if that is what they intend.
    Last edited by Cornucopia; 15-07-2014 at 11:18 AM.
    I'm a Board Guide on the Phones & TV, Techie Stuff, In My Home,
    The Money Savers Arms and Food Shopping boards. I'm a volunteer to help the boards run smoothly, and I can move and merge threads there. Any views (especially those on the UK TV Licence) are mine and not the official line of moneysavingexpert.com.

    Board guides are not moderators. If you spot an inappropriate or illegal post then please report it to forumteam@moneysavingexpert.com
    • Rafter
    • By Rafter 15th Jul 14, 11:26 AM
    • 3,837 Posts
    • 1,366 Thanks
    Rafter
    I think the cap is important and at 100% of the amount borrowed is easily understood.

    What isn't clear from the announcement is over what period it applies?

    For me, it feels that 12 months/ 1 year is realistic and that it should apply to any form of unsecured borrowing whether loan, credit card, store and caatalogue credit, doorstep loan or overdraft over say a minimum of £100.

    So borrowers could never be charged fees or interest over a 12 month period greater than the amount borrowed.

    As now, charges for late payment or default or modest processing fees for non-electronic payment could be levied on top - but have to be proportionate to the cost for the loan provider and capped as additional protection.

    A great first step though for protecting consumers from themselves and profiteering lenders.

    R.
    Smile , it makes people wonder what you have been up to.
    • dazleech
    • By dazleech 15th Jul 14, 12:19 PM
    • 146 Posts
    • 1,277 Thanks
    dazleech
    Will this apply to all forms of loans? Including mortgages?

    I do hope so
    Originally posted by Tiny Tina
    I agree, we shouldn't be discriminating against any kind of borrower
    • Former MSE Helen
    • By Former MSE Helen 15th Jul 14, 12:20 PM
    • 2,324 Posts
    • 971 Thanks
    Former MSE Helen
    MSE News: Payday loans cap will slash costs, regulator says
    The FCA says the cost of payday loans and other high-cost short-term credit will fall 'significantly' under its plans ...

    Read the full story:

    Payday loans cap will slash costs, regulator says




    Click reply below to discuss. If you havenít already, join the forum to reply. If you arenít sure how it all works, read our New to Forum? Intro Guide.

  • Former MSE Aileen
    Hi all

    The cap will only apply to 'high-cost short-term credit'. Under the FCA definition of this, it will not include mortgages or payday loans where the repayment period is greater than 12 months. Their definition of high-cost short-term credit is:

    A regulated credit agreement:

    (a) is a borrower-lender agreement or a P2P agreement;

    (b) in relation to which the APR is equal to or exceeds 100%;

    (c) either:
    (i) in relation to which a financial promotion indicates (by express words or otherwise) that the credit is to be provided for any period up to a maximum of 12 months or otherwise indicates (by express words or otherwise) that the credit is to be provided for a short term; or
    (ii) under which the credit is due to be repaid or substantially repaid within a maximum of 12 months of the date on which the credit is advanced;

    (d) which is not secured by a mortgage, charge or pledge; and

    (e) which is not:
    (i) a credit agreement in relation to which the lender is a community finance organisation; or
    (ii) a home credit loan agreement, a bill of sale loan agreement or a borrower-lender agreement enabling a borrower to overdraw on a current account or arising where the holder of a current account overdraws on the account without a pre-arranged overdraft or exceeds a pre-arranged overdraft limit.
    Last edited by Former MSE Aileen; 15-07-2014 at 2:38 PM.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

3,896Posts Today

3,964Users online

Martin's Twitter