11:03 03 October 2013
The Financial Conduct Authority (FCA) is proposing new rules that payday lenders must adhere to in order to protect consumers.
One of the proposals includes putting risk warnings on payday loan ads to advise borrowers about the dangers of debt.
The FCA also proposes the following: Lenders will not be able to roll over or extend loans more than twice, payday lenders may attempt to take out money out of the borrower’s account just twice, lenders will inform anyone extending a loan about free debt service, and that FCA could order lenders to change misleading adverts.
Martin Wheatley, the FCA's chief executive, said: "Our aim is to create a regime that protects consumers and allows businesses to operate.
“There is a balance to be struck here, and to make sure we get it right we want to hear from as many interested parties as possible.
"We believe that payday lending has a place; many people make use of these loans and pay off their debt without a hitch, so we don't want to stop that happening. But this type of credit must only be offered to those that can afford it and payday lenders must not be allowed to drain money from a borrower's account."
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