More than 1 million UK borrowers benefited from the Jan 1 regulations introduced by the FCA. Payday loans will now be capped at 0.8% a day and the total cost (fees, interest etc) will be capped at 100% of the original sum, which means no borrower will ever pay back more than twice what they borrowed.
Martin Wheatley, chief executive of the FCA, said the new caps would make the cost of a loan cheaper for most consumers. “Anyone who gets into difficulty and is unable to pay back on time, will not see the interest and fees on their loan spiral out of control – no consumer will ever owe more than double the original loan amount,” he added. However, it appears the new regime will not spell the end of the huge annualised interest rates quoted on payday loan websites. Despite the changes, Wonga is still able to charge a representative APR of 1,509%, while QuickQuid’s site was promoting an APR of 1,212%.