Where will the people go that borrow today, but can no longer do post the gap? The waterbed effect...the water goes somewhere...friends and family, black market, etc.?
Strict new price caps will come into force in the U.K.’s payday loans market in January, sector regulator the Financial Conduct Authority (FCA) has confirmed. The FCA said today that from January 2, 2015 it will be imposing an initial cost cap of 0.8 per cent per day for all high-cost short-term credit loans, which means interest and fees must not exceed 0.8 per cent per day of the amount borrowed. It will also be applying a total cost cap of 100% on a loan, meaning a borrower must never pay back more than 100% of the amount they borrowed in order to protect them from escalating debts. Fixed default fees are also capped at £15 for borrowers who do not make loan repayments on time. And interest on unpaid balances and default charges must not exceed the initial rate.