The Financial Conduct Authority are to take over FSA's position for monitoring the payday loans sector during April 2014 and will be adopting a much more hands on approach in supervising payday loan practices.
The City Watchdog will be taking over from the FSA (Financial Services Authority) and intend on clamping down upon the payday loans sector as the present circumstances are not providing sufficient protection to consumers and abusive practices are a regular occurrence amongst which both pawn brokers and debt collectors are also to be closely monitored.
Martin Wheatley acting chief of the FCA and his team are to replace the FSA and further take over the credit situation currently being dealt by the OFT (Office of Fair Trading) for payday loans uk.
The power the FCA will have over payday lenders enable them to impose unlimited fines and even bans where required, Wheatley advised: "There is a growing concern regarding payday lenders and their abusive practices, we intend to clamp down stringently monitoring their conducts." At present the OFT can ban offending lenders when the fall short of their obligations however the FCA will be able to provide better outcomes for consumers involved.
For those lenders wishing to join the payday market there will be much more scrutiny involved before the are allowed to operate especially regarding the operatives in key management positions and their competence to run such a financial institution whether it be a payday lender, pawn broker, credit reference agency or debt collector.
Other non-profit financial bodies such as counselling organisations and companies that provide their members facility to make payments in instalments will not be as strongly monitored and receive such stringent measures; instead they will pay lower fees.
The FCA will be able to impose across the board cap on lending percentages imposed and restrict the period the loans can be taken over and amount of rollover's that can take place.
Lenders with existing CCL's (Credit Consumer Licenses) as part of the transition will have to apply for interim permission to operate whilst the takeover is conducted between the FCA and FSA, Existing Licenses will lapse on the 31/03/2014 and the FCA interim permission will start from the 01/04/2014.
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