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Payday loans to be capped

Payday loans costs will be capped under plans being announced by Chancellor George Osborne. Regulator the Financial Conduct Authority will set the level of the cap, which will cover fees charged on the loans as well as interest.

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Government 'must look at causes of payday loan use'

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:

The Government's plan to cap the cost of loans only goes to show how out of control the industry is ...

Government must also tackle the underlying need for payday loans and ask what is driving people to short-term credit in the first place.

– Gillian Guy, chief executive, citizens advice

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.

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