Friday, 27 January 2012

Clampdown on payday lenders

The government has announced that payday lenders and other providers of short-term credit will face much tougher regulation when a new watchdog body, the Financial Conduct Authority, starts work next year.

Ministers have promised that payday lenders will face more rigorous checks before they can set up in business and there will be more resources devoted to investigating their tactics once they start lending.

If customers are ripped off, the FCA will have the power to impose unlimited fines - compared with the maximum penalty of £50,000 which the Office of Fair Trading can impose at the moment.

The announcement came with the publication of the Financial Services Bill, which confirms that the new FCA will take over responsibility for policing consumer credit.

The FCA also assumes the consumer protection role of the current Financial Services Authority, charged with trying to make sure that scandals such as pension, endowment and PPI mis-selling don't happen in future.

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