The Welsh Government has called for tougher action on high interest payday loans companies after the new regulator said the “clock is ticking” for such lenders.
The Financial Conduct Authority takes over from the Office of Fair Trading for the regulation of consumer credit on April1 2014.
Martin Wheatley, the FCA’s chief executive, said: “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. That is why we’re imposing tighter affordability checks, and limiting the use of rollovers and continuous payment authorities.
“Today I’m putting payday lenders on notice. Tougher regulation is coming and I expect them all to make changes so that consumers get a fair outcome. The clock is ticking.”
Jeff Cuthbert, Caerphilly AM and the Welsh Government’s Communities and Tackling Poverty Minister, said the FCA’s moves were in the right direction but more needed to be done.
He said: “Communities across Wales are facing a squeeze on their incomes and the most vulnerable are starting to feel the full force of cuts to welfare. I am deeply worried that this combination will mean more and more people being tempted by these loans simply to make ends meet.
“There are so many reasons to be concerned by the growth of payday lenders, from the way they assess a person’s ability to afford a loan, to the torrent of advertising that can be seen in our newspapers, on TV and online.
“I want to see regulators and the UK Government take tough action on this sector.
“The Welsh Government is supporting the expansion of credit unions as an alternative to high-rate loan providers .We have a target of getting 6% of the Welsh population being credit union members by 2020.”