The Financial Conduct Authority has said that payday lenders will only be able to charge 0.8% of the amount borrowed per day. Nobody will be forced to pay back more than twice what they have borrowed and default charges will be limited to £15. The new measures will be introduced from January.
Naomi Long MP said: “Debt and other financial difficulties are a growing problem for many people across Northern Ireland. It can have an effect on people’s mental health and impact on their daily lives.
“Payday loans are marketed as a quick and easy way to resolve financial issues but in the long term they can often make the situation worse. Many of their adverts highlight the speed at which such a loan can be approved, however those in serious difficulties should be making informed decisions to help resolve their problems.
“The measures announced by the Financial Conduct Authority are a step in the right direction, however more must be done to direct those in serious financial trouble towards professional financial advice services such as the Citizens Advice Bureau.
“Stricter regulation of loan rates will give greater protection to borrowers and prevent those with long term financial issues from seeing their debt spiral out of control as a result of a payday loan. I also hope that we will see further regulation of the aggressive marketing campaigns that many payday lenders deploy.”