The Financial Conduct Authority has stepped in with emergency action to curtail hidden brokerage fees levied on customers by payday lenders.
The new rules mean brokers can no longer raid the bank accounts of customers with fees they did not expect. It follows complaints to banks from customers who do not understand the various fees they have been charged.
The FCA has uncovered evidence that brokers, as well as charging additional fees that were not properly explained, are then sharing the account details of those getting the loan with up to other companies, who also attempt to charge a fee.
In an unusual step for the FCA - who normally work in consultation with the firms - seven firms have been stopped from taking on new business and three further cases have been referred for enforcement action. The new rules come into force on January 2 next year. Martin Wheatley, chief executive of the Financial Conduct Authority said: