Research for the Financial Conduct Authority led to a price cap for payday loans
Protecting more than four million payday loan customers from punitive interest fees associated with greater debt and financial hardship.
The world’s largest study of the behaviour of households that use payday loan services was undertaken with the Financial Conduct Authority (FCA) leading to recommendations for setting the level of a loan price cap. FCA consumer credit policy was shaped by the study, helping protect 4.3 million people from irresponsible loan practices in the UK. New FCA regulations came into force in January 2015, limiting interest and charges on payday loans to 0.8% per day and introducing new standards for affordable credit.
One year after the introduction of the policy the number of payday lenders dropped from 400 to below 150. The remaining firms withdrew from the market. Within three months of the regulations coming into force, the number of loan-related problems handled by Citizens Advice dropped by 50%.