An east London MP will today (23 April) table a Parliamentary amendment aimed at capping fees and interest for taking out payday loans.
Walthamstow MP Stella Creasy, who refers to the loans as “legal loan sharking”, has tabled the amendment to the Financial Services Bill.
Under the amendment to Clause 22 new powers would be given to give the planned Financial Conduct Authority (FCA) specifically to cap charge firms make for credit.
This cap would not be on interest rates but on the total amount charged for borrowing after arrangement fees and interest were added together.
Creasy said: “This would give regulators powers to tackle the problems caused by legal loan sharking.
“The Financial Services Bill covers many issues including reforming the way banks are regulated and the creation of a new Financial Conduct Authority.
“Crucially the new FCA will also oversee consumer credit – and have the power to act against companies who offer toxic financial products.”
Creasy’s amendment reads: “The FCA may make rules or apply a sanction to authorised persons who offer credit on terms the FCA judge to cause consumer detriment.
“This may include rules that determine a maximum total cost for consumers of a product and determine the maximum duration of a supply of a product or service to an individual consumer.”