Speaking about the cap on the cost of credit, Russell Hamblin-Boone, Chief Executive of the Consumer Finance Association, which represents some of the best known short term lenders, said:
“Higher standards of conduct have gone hand in hand with a reduction in loans being approved. With the cap, fewer people will get loans from fewer lenders but the demand for credit will still be there and so there will be no significant impact on debt levels.
“The warning signs are already there. Only a quarter of people turned down for loans under tougher lending criteria said that they were better off not getting the money; the rest incurred charges for missed payments. The regulator will need to monitor this closely and act to prevent illegal lenders filling the credit gap.”