Wonga, QuickQuid, Wizzcash and others face strict new payday lender rules
Britain’s burgeoning payday loans market is the subject of toughened regulations from today following the introduction of new rules curtailing the ability of lenders to roll-over loans more than twice or directly raid borrowers bank accounts to recover cash.
Designed to strengthen consumer protections for borrowers struggling to repay their loans the legislation will affect all short term lenders such as Wizzcash and QuickQuid which charge annual interest rates in excess of 5,000 per cent.
The biggest of these firms however, Wonga, claims that the new rules will have limited effect a just 4 per cent of its loans were extended, whilst 1.4 per cent were extended twice and 1.1 per cent had been extended three times.
Lenders will also be barred from collecting repayments through a continuous payment authority, which allows repeated attempts to claim partial amounts if there are insufficient funds to cover the full amount. In future lenders will be limited to two attempts to collect the full repayment only.
The changed rulebook follows the introduction of a new regulator, The Financial Conduct Authority, in April.