Earlier payday cap?

Labour wants the cap on the cost of credit from payday lenders to be implemented 3 months earlier than the government is planning.

Ministers have promised that the financial watchdog, the FCA, will have a duty to impose a cap and that the launch date should be not later 2nd January, 2015.

Today Labour has proposed an amendment to the Banking Reform Bill, which would require the FCA to apply the cap from 1st October, 2014.

It wants the upper limit on interest and other charges to come in before shoppers go on a borrowing spree before Christmas next year.

There is expected to be a vote on the amendment in the Lords tonight.

Here's the amendment, followed by the original government amendment bringing in the cap.

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22*

Line 19, leave out “2 January 2015” and insert “1 October 2014”

After Clause 123

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20

Insert the following new Clause—

“Duty of FCA to make rules restricting charges for high-cost short-term credit

(1)   In section 137C of FSMA 2000 (FCA general rules: cost of credit and
duration of credit agreements), after subsection (1) insert—

“(1A)    The FCA must make rules by virtue of subsection (1)(a)(ii) and (b)
in relation to one or more specified descriptions of regulated credit
agreement appearing to the FCA to involve the provision of high-
cost short-term credit, with a view to securing an appropriate
9degree of protection for borrowers against excessive charges.

(1B)   Before the FCA publishes a draft of any rules to be made by virtue
of subsection (1)(a)(ii) or (b), it must consult the Treasury.”

(2)   In Schedule 1ZA to FSMA 2000, in paragraph 11 (FCA’s annual report), in
sub-paragraph (1), after paragraph (h) insert—

“(ha)   any rules that it has made as a result of section 137C during
the period to which the report relates and the kinds of
regulated credit agreement (within the meaning of that
section) to which the rules apply,”.

(3)   The FCA must ensure any rules that it is required to make as a result of the
19amendment made by subsection (1) are made not later than 2 January 2015
and apply (at least) to agreements entered into on or after that date.”