Payday loans charter demands new rules for lenders | Money | The ...

A cash loans shop in London: campaigners said the rules did not go far enough and are calling for better affordability checks. Photograph: Dan Kitwood/Getty Images

Payday lenders are facing fresh calls for a regulatory crackdown with the launch of a campaign backed by MPs, debt campaigners and consumer groups on Tuesday.

Consumers are being urged to sign up to the Charter to Stop the Payday Loan Rip-Off, which demands that the government takes a stronger stance against the £2bn industry in shorter-term loans.

Lenders, which can charge annual interest rates in excess of 5,000%, will be regulated from April 2014 by the Financial Conduct Authority, which recently outlined new rules for the sector, including limiting the number of times a loan can be extended and how many attempts a lender can make to recover payments from a borrower's bank account.

However, campaigners said the rules did not go far enough and are calling for better affordability checks, a crackdown on advertising which would include rules on when promotions could be shown, and real-time data from the industry so lenders can check if a borrower already has other loans. They also want to see restrictions on the total amount lenders can charge so that loans do not spiral out of control.

Paul Blomfield MP, who has been attempting to get a private member's bill through parliament, said: "The FCA's proposals for regulation are a step in the right direction, but they don't go far enough. We want members of the public, MPs, councils and charities to back the Charter and join our call for tougher regulation and enforcement.

"If this 'once in a generation' opportunity is missed, payday lenders will be able to carry on exploiting people."

The Charter has cross-party support and the backing of a number of debt charities, who have reported growing numbers of clients falling into difficulties with repayments.

Peter Tutton, head of policy at StepChange Debt Charity, said: "Over 30,000 people contacted us for help with payday loans in the first half of 2013, almost the same as for the whole of 2012. This is a dangerous market for financially vulnerable consumers and effective regulation is long overdue."

Source: http://www.theguardian.com/money/2013/oct/15/payday-loans-regulatory-crackdown
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