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FCA Gives Full Permissions To Payday Loan Lenders

The Financial Conduct Authority (FCA) responsible for monitoring and regulating the high-cost short-term lending industry has granted authorisation to the most competitive and compliant lenders in the UK.

The Office of Fair Trading, known as the OFT was taken over in April 2014 by the Financial Conduct Authority. It was at this point that they began the lending market which appeared to be getting more and more expensive. When the change process began, lenders had to apply for ‘interim permission,’ to trade with the opportunity to apply for ‘full permission’ to continue trading long-term.

Now in April 2016, the FCA has now given full authorisation and permissions to a number of lenders. The selected lenders are those who were able to meet a set of minimum requirements set out by the FCA and have shown a proper understanding of the new lending rules.

“This is the beginning of an exciting new chapter for us” said the CEO of the company Mr Lender when they were granted full permissions.” CEO, Adam Freeman went on to say that his company prided itself on providing competitive products and endeavoured to provide a service that was responsible, affordable and transparent.

Rebuilding The Reputation of Payday Loans

Payday loans have become increasingly popular as a way of accessing finance for short term need however the industry, which is worth over £2 billion, has been increasingly criticised over the past few years both by the press as well as public leaders and politicians.

It is this negative press that bought the problems in the industry to light and triggered the FCA’s regulatory changes in 2014. The new rules have made payday loans safer by forcing out the ‘bad’ lenders and keeping in the responsible lenders. ‘Bad’ lenders was the name given to companies that charged upfront lending fees, did not carry out strict affordability checks and sold on the information of applicants to other parties.

The impact of the new rules has been drastically clear with a sharp drop in the number of payday loan lender in the market and a 45% drop in the number of complaints according to the Citizen’s Advice Bureau.

The implementation of the new rules has led to a noticeable change for the better in the payday loan market with responsible lenders having the chance to repair the image of the payday loan service.

The FCA Payday Lending Rules

The FCA rules are strict but very simple. The main changes included a price cap for all payday lenders no matter their size, which was set at 0.8% per day, for every £100 borrowed. As well as this cap, borrowers are now limited to two rollovers per loan and a one-off default fee that is limited to £15.

All companies providing or comparing short-term credit must provide a link to the MoneyAdviceService.org.uk on their website or any other marketing material to ensure borrowers have access to the necessary financial support that they may need to encourage both responsible borrowing and lending.


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