The FCA has published a reminder for payday lenders and other firms offering high-cost short-term credit that additional rules have come into effect from 1 July 2014.
Payday lenders and other firms offering high-cost short-term credit must now limit the extension of loans to two rollovers. Where a high-cost short-term loan has been rolled over twice, including before 1 July 2014, lenders will not be able to rollover the loan again.
High-cost short term lenders are also now limited to two unsuccessful attempts to use a continuous payment authority (CPA) to take a repayment. They cannot use a CPA to take a part-payment. The borrower will be able to ‘reset’ the CPA following two unsuccessful attempts to use a CPA, when the agreement is rolled over or refinanced.
Firms offering high-cost short term credit must include a prominent risk warning on all financial promotions. These lenders had to include a risk warning on all financial promotions in electronic communications since 1 April 2014 (unless the medium used makes this impracticable). The risk warning is now also required on print, TV and radio promotions.
View Tougher rules for payday lenders take effect, 1 July 2014