A financial watchdog has unveiled tough new rules on payday lenders, that include:
- All payday lenders adverts and other promotions must be fair, clear and not misleading. The FCA can ban misleading adverts.
- Affordability checks for every credit agreement to ensure that only those who can afford a loan can get a loan.
- Specific rules for the payday sector have been proposed which include; limiting loan rollovers to two, clear risk warnings will be displayed on all adverts and information on where to get free debt advice will be given to every borrower that rolls over a loan.
- A dedicated enforcement team will crack down on poor practice, money laundering and unauthorised business.
- Firms that break the rules may face detailed investigations and tough fines.
The FCA will take on new powers to ban adverts however there will be no new rules governing the interest rates charged by the companies.
New rules on the way for lenders in how they grant loans and demand payments, but no changes to the interest rates or fees they can charge.