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Nobody Wants Rogue Payday Lenders

Written By On 03/10/2013

The Financial Conduct Authority have issued warnings to the short term loan industry that they intend to introduce much more stringent guidelines to adhere to.

The new City watchdog in waiting will be passed on the mantle at the beginning of April next year from the Office of Fair Trading.

Yesterday the regulator's chief executive Martin Wheatley said he was concerned that some borrowers taking out payday loans were not in a position to. He wants lenders to take out proper checks on their applicants to make sure they are in a position to repay the loan.

He also requires that borrowers be allowed to roll over their loan to a maximum of two times should they need to. This will help prevent companies being legally entitled to recover their money by taking it straight from the borrower's account.

Mr Wheatley said

We believe that payday lending has a place. Many people make use of these loans and pay off their debt without a hitch, so we don't want to stop that happening. But this type of credit must only be offered to those that can afford it and payday lenders must not be allowed to drain money from a borrower's account

Jo Swinson, Liberal Democrat minister for Employment Relations and Consumer Affairs in the Department for Business is in agreement. She feels the FCA's plans would have 'real impact' and said

limiting the number of roll overs and the use of a continuous payment authority to twice is a radical step that will change the incentive structure of the industry.

Consumer Finance Association chief executive Russell Hamblin-Boone also agrees and welcomes the new regulations as he wants to 'drive out irresponsible lending practices and protect consumers'.

He added his members

support well designed, well implemented regulation in order to protect consumers and drive up standards.