New FCA rules designed to rein in short-term credit excesses

The Financial Conduct Authority has confirmed its “tough new rules” for the UK’s £200bn consumer credit market – with the biggest changes affecting high-cost short-term lenders.

Changes include mandatory affordability checks for payday borrowers and new powers for the FCA to ban any misleading adverts from payday lenders.

Most of the new rules will come into force on 1 April, when the FCA officially becomes the regulator for around 50,000 companies operating within the consumer credit field. 

Other key changes for short-term, high cost lenders include:

·         limiting the number of loan roll-overs to two

·         restricting (to two) the number of times a firm can seek repayment using a continuous payment authority

·         a requirement to provide information to customers on how to get free debt advice

·         requiring debt management firms to pass on more money to creditors from the first day of a debt management plan, and to protect client money

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