The FCA said there was evidence that the cap on the fees charged for high-cost short-term credit (HCSTC) loans вЂ“ often described as ‘payday’ loans вЂ“ had led to improved outcomes for consumers in its response to a call for input (72 page / 1.86MB PDF) into its review of high-cost credit products.
The FCA said customers had been spending less for credit, paid back on time more regularly, and required less assistance from financial obligation charities. Those charities indicated that individuals are presenting by themselves early in the day and with reduced debts, suggesting that underlying problems are now being addressed sooner.
The regulator said it might keep up with the limit for the next 36 months and again review it in 2020.
The review highlighted dilemmas in other regions of high-cost credit that will now be explored more profoundly. These included the high price of rent-to-own borrowing and specially overdrafts.
Notably the FCA stated there clearly was a вЂњcase to take into account the fundamental reform of unarranged overdrafts and if they needs a spot in every modern banking marketвЂќ. It said banking institutions will make unarranged overdrafts available without the evaluation of affordability, and therefore a minority of customers incurred a lot of costs.
вЂњBased in the proof we must date, we think there is certainly an incident to think about the basic reform of unarranged overdrafts and whether or not they must have a spot in almost any banking market that is modern. Continue reading →