Pay Day loans to be capped

The Government has been reviewing the practices of the so called Pay Day Loan companies for some time and has announced intentions to place a cap on the cost of them as they do now in Australia. This will become part of the Banking Reform bill currently on its way through Parliament.

The actual amount will be decided by the Financial Conduct Authority (FCA). Although these loans are in theory short term, they can carry huge interest rates and it would only take one or two monthly repayment dates to be missed, for the borrower to be locked into a spiral of debt that cannot be repaid.

The Citizens Advice bureau this year, have been inundated with calls from people who have taken out these loans at interest rates that can be as high as 3,000 %, who can no longer repay them and are not treated sympathetically by their lenders. Far from it.

The manner in which the Pay Day Loan companies are marketing their products is also being looked at in a wide ranging investigation into the industry by the Competition Commission who will report next year.

There are over 200 of these companies operating in this area, many bringing nothing but distress to families already in financial trouble and regulation to curb the manner in which they operate, is long overdue and is needed urgently.