MAKERFIELD’S campaigning MP has welcomed key new moves to rein in the booming pay day loan companies.
She has been the leading voice in the Commons demanding the industry face stiff controls having seen first hand the damage the dubious industry wreaks in poorer communities after almost a quarter of a century as a Citizens Advice Bureau leader.
Yvonne Fovargue today hailed the proposals, which could be introduced as early as next spring, as “encouraging”.
The Financial Conduct Authority (FCA) - which takes over as consumer credit regulator from April 2014 - has been in talks with Ms Fovargue and other consultees including the trade body representing the firms itself.
It now proposes from spring that lenders be forced by statute to place “risk warnings” on the TV adverts such as the Wonga puppets to warn borrowers about the dangers of debt. Under the plans, the FCA will also be allowed to ban any loans, or adverts, that it does not approve of.
If approved, lenders will also not be able to extend, or “roll over” loans more than two times.
While the number of attempts a payday lender can take money out of a borrower’s account using a Continuous Payment Authority (CPA) should also be limited to two
Any borrower extending a pay day loan should be told about free debt advice.
While the FCA itself could order lenders to end products that are “not in the best interests” of clients.
Ms Fovargue said: “It is a good start, there is a lot done but there remains a lot more to do.
“A constituent was offered 14 loans in just one day which is why I am so anxious to see a real time database set up which every company has to subscribe to which would make the industry easier to regulate and make life easier for the companies themselves
“Some borrowers who fall behind are also being charged £50 a letter.”