The U.K.'s Most Hated Industry Capped on Loan Shark Rates

The U.K.’s payday loan industry has come under fierce regulation and the industry’s interest rates will be capped by January of 2015. This means that total interest charged on short-term consumer loans, e.g. payday loans, cannot be higher than 0.8% per day (of principal balance borrowed). The cap also affects default rates and fees, which can easily take an already high interest rate loan to a four- figure interest rate loan very quickly. The recent announcement of the cap has pushed many of the largest payday lenders in Britain out of the market. The U.K.’s Financial Conduct Authority (FCA) said the new regulations are a large leap forward.

(Source: Financial Times: http://www.ft.com/intl/cms/s/0/a48ec296-0be6-11e4-a096-00144feabdc0.html#axzz37Y3N8IJG)

Posted by Corey Curwick Dutton