New powers to tackle payday loans with sky-high rates

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Payday loans have become a real problem for many people across the UK, particularly since the economic downturn. Some loan sharks charge interest rates as high as 4000%.

Labour says the promise from the Treasury amounts to a climbdown
Labour says the promise from the Treasury amounts to a climbdown Credit: Press Association

The Government has always said it's tackling the problem but there has been frustration that it hasn't done enough so far.

Now, the Treasury has promised to give powers to a new regulator (the Financial Conduct Authority) to cap interest rates and act against rogue lenders.

All this just as Labour peer Lord Mitchell was due to table a similar amendment this afternoon that was even supported by the incoming Archbishop of Canterbury.

Labour says this amounts to a climbdown because the Government was facing defeat.

The Government is claiming it was always going to give these powers to the regulator in the Financial Services Bill. Now it certainly will do in its version next week.

That can only be good news for those suffering from the high interest rates of payday loans.