A 646-page policy statement published last week revealed that payday lenders and debt management companies will have to introduce mandatory affordability checks for customers, and will limit the number of loan ‘roll-overs’ to two.
The FCA takes over regulation of the £200bn a year consumer credit market from the Office of Fair Trading from 1 April.
FCA chief executive Martin Wheatley said the new regulatory regime would “help us to protect consumers and give us strong powers to tackle any firm found to be overstepping the line”.
|Key pointsUnder the new rules, the FCA will also be able to:|
• Ban any misleading adverts from payday lenders
• Restrict (to two) the number of times a firm can seek repayment using a continuous payment authority
• Require debt management firms to pass on more money to creditors from day one of a debt management plan, and to protect client money
• Introduce a robust authorisation gateway to ensure firm and individuals authorised to do consumer credit business are fit and proper
Stuart Duncan, adviser for East Sussex-based The Personal Mortgage Service, said: “This means that the FCA will have supervision of all secured loans, and if it curbs the excesses of payday loans companies that has to be a good thing.”