Pay day loans condemned

MEP Paul Nuttall

Plans announced by the Financial Conduct Authority to regulate consumer credit – including the payday loans industry – have been criticised by a local MEP.

"These proposals involving payday lenders do not go far enough and they need to impose a cap on interest rates," said Paul Nuttall, UKIP deputy leader.

The FCA takes over regulating consumer credit from the Office of Fair Trading next April and it has revealed proposals for greater protection for consumers and tougher guidelines for payday lenders.

Advertisements from firms, for instance Wonga and QuickQuid, will also be more tightly regulated and potentially misleading ads will be banned.

But Mr Nuttall, who has repeatedly argued against the extortionate interest rates charged by payday lenders, says that the plans "are not tough enough and do not address the iniquitous interest rates charged by some firms.

"The FCA has said it believes there is a place for payday lending, but is there? Many American states have effectively banned them and other countries, including Australia, had capped the interest rates.

"Credit unions are a much better avenue for short term loans and I think the FCA needs to go back to the drawing board as far as payday loan companies are concerned," he added.