- 7 updates
Citizens Advice chief executive Gillian Guy has welcomed the proposed cap on payday loans but said that it was important to address the causes of the increase in their use:
New figures released by Citizens Advice found that three out of four borrowers find it difficult to repay payday loans, while 62 percent of loans still come without proper checks to assess whether borrowers can afford to repay.
Business Secretary Vince Cable has warned that regulating payday loans creates a risk of "letting the 'baseball bat brigade' into this industry" - apparently referring to loan sharks.
Speaking on BBC Breakfast, he said he supported the action being taken to cap charges, but added that it had to be "very, very carefully done".
Labour shadow business minister Stella Creasy has accused the Government of "following Labour’s lead" on capping the charges for payday loans.
But she said in a statement that the proposal doesn't go far enough "to address the damage this toxic industry has done":
Chancellor George Osborne has said he wants the new regulator, the Financial Conduct Authority, to "look at the whole package" of charges for payday loans.
He said this would include considering a cap on arrangement fees and penalties as well as the interest rates, in order to put a "cap on the total cost of credit".
Payday loans costs will be capped in a bid to protect borrowers from being exploited, Chancellor George Osborne said.
Payday loans costs will be capped under plans being announced by Chancellor George Osborne.
New financial regulator the Financial Conduct Authority will set the level of the cap, which will cover fees charged on the loans as well as interest.
Treasury officials said the Government had always kept the case for a cap under review and there is now "growing evidence" internationally to support the move.
Latest ITV News reports
The Chancellor has announced a cap payday loan charges amid claims that such an approach could lead to a rise in the use of loan sharks.