Confirming that all of the Consumer Finance Association’s (CFA) members have revised their products to ensure they are compliant with the new cap, Russell Hamblin-Boone, Chief Executive of the CFA, which represents some of the best known short-term lenders in the UK, said:
“This is the start of a new era for short-term lenders who are operating in an entirely new lending landscape under the FCA. We expect to see fewer people getting loans from fewer lenders and the loans on offer will evolve but will fully comply with the cap. The commercial reality is that the days of the single-payment loan are largely over – payday loans are being replaced by higher value loans over extended periods.
“Initially, prices of loans will be at or near the cap. In time we may see risk-based pricing, but innovation could be stifled by the threat of the regulator as lenders seek FCA authorisation.”