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Payday Loans: New Law To Cap Costs

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The government is to introduce a new law to cap the cost of payday loans.

The level of the cap, which has not yet been announced, will be decided by the new industry regulator, the Financial Conduct Authority (FCA).

The Treasury says there is "growing evidence" in support of the move, including the effects of a cap already in place in Australia.

But the industry said the move could restrict credit, and encourage more illegal lending.

The cap will be included in the Banking Reform Bill, which is already going through Parliament.

Speaking to the BBC, the Chancellor, George Osborne, said there would be controls on charges, including arrangement and penalty fees, as well as on interest rates.

"It will not just be an interest rate cap," he told BBC Radio 4's Today programme.

"You've got to cap the overall cost of credit."

No surprise the industry says it could restrict credit, they are hardly going to agree with this.

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My guess would be the cap will be ludicrously high, to have no effect whatsover.

Yes, a cap could be anything.......and to be honest do desperate people who need cash now this minute look at what it will cost them?.....tomorrow is another day to get through. ;)

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the news reported that there are really people who take out a payday loan to pay for Christmas :o

what are they thinking?

bake a few extra nibbles and ditch the expensive presents.

as mentioned above if payday loans are not there illegal cash lenders will arise who are even less regulated. :(

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