Citizens Advice Scotland has welcomed the news that the Financial Conduct Authority is to cap interest rates for payday lending. But CAS has also said that more needs to be done to protect consumers from excessive payday loan charges.
CAS spokesperson Fraser Sutherland says,
“Scotland’s CAB service sees the raw end of the payday loan industry: the thousands of people whose lives are ruined by unmanageable debt. We have been campaigning for years for a cap on charges, and we are pleased that the FCA has imposed one.
“We are disappointed however that they have chosen not to listen to the arguments made by CAS and others about the level of the CAP. 0.8% is a start, but will still cause problems for lot of people on low incomes who get in over their heads.
“Today’s announcement is one good step forward, but a lot more needs to be done. We need to monitor the effect of this cap, and keep an open mind on whether it should be tightened in future. We also need to increase the number of fair lending options so that people who need to borrow money are not forced into using high-cost payday loans. Both the Scottish and UK governments have a role here.
“Meanwhile we would urge people to remain very cautious when borrowing money. Today’s announcement does not make payday loans safe overnight. If you are in financial difficulty, borrowing money is not the answer. Instead, you should get free financial advice from your CAB.”
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The CAS submission to the FCA consultation on this can be read at: