Payday Loans

Lord Razzall Excerpts

Wednesday 11th December 2013 Lords Chamber

[Lord Newby]

My Lords, this matter has been looked into. The Financial Conduct Authority, which takes responsibility in this area from next April, has already proposed limiting continuous payment authorities to two payments and reducing rollovers to two. It has the power to constrain them further than that if that is still seen to be an issue. That is one of the things that the FCA will look at as part of its assessment of the total cap of the cost of payday loans, which it is currently considering.

[Lord Razzall (LD)]

My Lords, I will follow the previous two speakers but extend the question a little more widely. What steps do the Government propose to take to ensure that payday loan operators cannot simply move their headquarters overseas and operate outside the restrictions that are going to be brought in?

[Lord Newby]

My Lords, under the e-commerce directive, which was introduced during the lifetime of the last Government, payday loan operators are able to relocate. However, a majority of EU member states already have some kind of cap on the cost of payday loans, even if not necessarily as comprehensive a cap as we have, and there is an ongoing debate in those member states that do not yet have a cap about implementing one. There are already a majority of EU member states to which it would almost certainly be uneconomic or pointless for payday loan lenders to switch their bases of operation.