The financial market felt a significant shake down as the Financial Conduct Authority introduced new payday loan directions for standardizing high cost short term credit. http://www.trueblueloans.co.uk
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The new fca regulations and their impact
1.
2. The financial market felt a significant shake
down as the Financial Conduct Authority
introduced new payday loan directions for
standardizing high cost short term
credit. The regulations implemented were
aimed for controlling unlawful loan hunters
from ripping off or misusing the current
circumstances of the customers, and
ensuring that their benefits remain secure,
however the effect of these regulations is
yet to be seen.
3. The Influential Regulations introduced in the
latest papers released by FCA :-
The total initial cost applicable including
interests and other charges only will be 0.8 of
the amount of loan taken.
The interest on unpaid amount is decided to be
nothing less or more than £15. This initial rate will
always be higher than this default amount.
The new regulation also ensured that in any
possible situation the consumer will never pay
back the loan amount which is more than
double of the amount borrowed.
4.
5. Under the influence of FCA regulations
the already unregulated business sector
became united, moreover the consumer
funding techniques incorporated both
loan based and investment based
consumer subsidizing. With effect of these
upgraded regulations all the loan lending
companies started feeling their
responsibility on the facts with which they
used to entertain the customers who
came to them is search of financial slots
and for the services they promised to sell.
6. A legitimate permit was released for many of
the organizations which were subjected to
word under the Financial Conduct Authority.
Commission based offices got to be banned
under FCA regulations and furthermore in the
lights of caps proposed by FCA, many big loan
and finance companies marked edge of
benefit got to be low. Only the big name
financial companies and loan agencies who
have shown the effect of their presence and
were distant for low wage families generally,
survived the trial.
7.
8. FCA always wanted to have one solitary
reputed big money lender and three
other agencies supporting it and looked
to filter all those finance and other
payday lenders from loan market who
were not sure of changing their business
strategy and model. The regulation
stated that a consumer would never pay
more than £200 for a loan of £100
9. The Actual Motives behind the Acts
As per the speculations of FCA total of 7%
of borrowers in UK never had any actual
reason to borrow money. The FCA
regulations proved to be the blessing for
more than 70,000 consumers who used to
seek financial support from payday
lenders. The effect of the new rules was
seen when 35 % of borrowers were cut
short from the plates of payday lenders.
10.
11. The Loop Holes in New Rules
FCA didn’t look that active in controlling the
high rising ramifications of ARPs while they it did
put a cap on payday lenders but ARP has no
one to check after it and assist it. The situation is
that if someone buys a loan of 100 bucks, then
he would have to pay a high interest of 20 bucks
in every couple of days. Know this may didn’t
look that much of a problem for high class, but is
certainly as alarming situation for middle and
low class families who have to choose whether
to eat dinner or to pay their bills.
12. The new regulation marked a dead end
for many payday lenders and not more
than four organizations were able to
survive the cap applied by FCA. The
agencies who managed to turn to face
the situation easily have already
changed their loan lending limits and or
were already dealing in a less than
market rate.
13.
14. Now the catch is that with so many companies
closing their shutters which marks most of the
customers will drive their money acquiring
needs from the only survived high end agency,
which will give them a 100% monopoly over
the financial market. Zero competition and
lack of options will drive consumers in a straight
line to the already crowded agencies which
will also mark the downgrading standards and
lack of service support to the customers.
15. The rules which were enforced to help the low
income families in the long run will only make
things worse for them. The 70,000 applications
which were found inappropriate for short term
loan under new FCA regulations will have to
look for other sources. And as per trusted
sources 2% of these consumers that is 1400
people move to the loan sharks who is return
greet them with high interests, and these
payday lending’s are impossible to track so
most of these loans will never get noticed,
which is also a big loss for FCA.
16.
17. Moreover with new regulations there will
be chances that people may not get
the full amount as expected by them,
and for the left money they will turn to
illegal loan sources. FCA needs to
understand that the high priority rules
which were introduced could only
benefit the primary consumers if they
can motivate consumers against illegal
and unregistered loan agencies.