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If you have ever considered, or taken out, a payday loan you may have put a lot of research into the payday loan lender that you chose due to quite a lot of negativity in the press. Although there are many responsible payday loan lenders out there to choose from it is also true that there are some lenders who are acting in an irresponsible way and not putting their customers first.
The Financial Conduct Authority, who is taking over the regulation of the consumer credit sector on 1st April, has said that it will be investigating how payday loan companies are treating those who borrow from them. This is to ensure that payday loan lenders are treating their customers with respect and caring about them more than the profit that they are making.
As more than a third of payday loans, which equal around £3.5 million per year, are paid back late or not at all, it is important that payday loan companies are sympathetic towards those who are struggling and that they have measures in place to protect those that they are lending to.
Some of the changes that the Financial Conduct Authority are looking to put into place are capping the cost of payday loans, stopping payday loan companies from lending to those who cannot afford to make repayments and limiting the number of times that a payday loan can be rolled over. Lenders will also have to check the income and cash flow of those who wish to take out a payday loan to make sure that they are only lending to people who will be able to afford to repay the loan.
When these measures are put into place the payday loan market will be far more responsible and those borrowing money will be treated much better than they have been previously. The Financial Conduct Authority believes that the new rules will mean that the payday loan industry loses around a quarter of lenders which will mean a fantastic improvement in the industry.
By Sasha Davison
12th March 2014
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