Cap on payday loans will not be relaxed
News Article Published: 05/07/2017
Tough new laws on payday loans will not be relaxed, the Financial Ombudsman Service (FOS) has said.
People will never have to pay more than double (in fees and interest) what they originally borrowed, according to the law.
Rumours recently emerged that the FOS may be set to raise the price cap on payday loans. Website of loans intermediary Quick Loans published the claim, which it says was revealed by “industry insiders”.
However, the FOS has labelled the claim “complete fiction”.
What is the price cap on payday loans*?
• Initial cost cap of 0.8% per day: Interest and fees must not exceed 0.8% of the amount borrowed on new loans and loans rolled over per day.
• Fixed default fees capped at £15: If borrowers cannot repay their loans on time, fees must not exceed £15. Interest on unpaid balances and default charges must not exceed the 0.8% rate.
• Total cost cap of 100%: Borrowers must never have to pay back more in fees and interest than the amount borrowed.
The caps mean someone taking out a loan for 30 days and repaying on time won't pay more than £24 in fees and charges per £100 borrowed. If you paid it back late, the maximum you'd be charged is £15, while the most you could repay in fees and interest on this £100 loan would be £100.
*Source: Money Saving Expert website
I think I was ripped off by my payday loans provider. What should I do?
An experienced financial claims solicitor can help.
Typically, solicitors can help clients claim back 100% of the interest and charges you have paid on your payday loan, along with an 8% statutory interest.
You will also be able to request that all loans that are found to be unaffordable be deleted from your credit file.
The largest settlement Goldsmith Williams has helped a client reach is £8,579. The average settle is £780.
For more information, call Goldsmith Williams Solicitors on 0845 373 3737 or make an online enquiry.
Content correct at time of publication