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WONGA and other “legal loan sharks” may finally face a cap on their fees and interest rates under new proposals from the finance industry watchdog.
The Financial Conduct Authority has tabled plans to cap payday lenders’ rates of profit, with default fees maxed out at £15 and a limit of 0.8 per cent interest per day on unpaid balances.
But Labour’s shadow consumer affairs minister Stella Creasy — a long-time campaigner against legal loan sharks — said the new rules still did not go far enough.
Ms Creasy said the proposed total cost cap of 100 per cent of the borrowed amount was far more generous than similar regulations in Japan, Canada and the US.
The authority had to commit to reviewing and reducing the cap and its coverage, she said, “to make sure none of these legal loan sharks slip through their net,” she said.
Industry lobby group the Consumer Finance Association said it would support “a cap that allows the industry to operate profitably.”