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| Payday loan rates 'to be capped' | Payday loan rates 'to be capped' |
| (35 minutes later) | |
| The government is to change the law to allow a cap to be imposed on the interest rates charged for so-called "payday loans". | The government is to change the law to allow a cap to be imposed on the interest rates charged for so-called "payday loans". |
| Ministers are to amend the Financial Services Bill to give the planned Financial Conduct Authority the power to limit charges. | Ministers are to amend the Financial Services Bill to give the planned Financial Conduct Authority the power to limit charges. |
| The news follows concerns over annual interest rates of up to 4,000%. | The news follows concerns over annual interest rates of up to 4,000%. |
| The government faced a possible House of Lords defeat on an amendment put down by a Labour peer over the issue. | The government faced a possible House of Lords defeat on an amendment put down by a Labour peer over the issue. |
| BBC political correspondent Norman Smith said it was being suggested that there should not be a blanket cap on interest rates but the Financial Conduct Authority (FCA) would be able to investigate different loan schemes and then set a limit on the amount of APR charged. | BBC political correspondent Norman Smith said it was being suggested that there should not be a blanket cap on interest rates but the Financial Conduct Authority (FCA) would be able to investigate different loan schemes and then set a limit on the amount of APR charged. |
| 'Usury' | 'Usury' |
| Labour peer Lord Mitchell put down the amendment to the bill, which was also signed by Lord Welby, the incoming Archbishop of Canterbury. | Labour peer Lord Mitchell put down the amendment to the bill, which was also signed by Lord Welby, the incoming Archbishop of Canterbury. |
| Lord Welby called the most costly loans "usury", saying that curbing them was a "moral" issue. | Lord Welby called the most costly loans "usury", saying that curbing them was a "moral" issue. |
| This followed concerns that loans intended to be short term have become prohibitively expensive and, in some cases, ruinous if not rapidly repaid. | This followed concerns that loans intended to be short term have become prohibitively expensive and, in some cases, ruinous if not rapidly repaid. |
| The government has now agreed instead to introduce its own amendment to the bill next Wednesday. | The government has now agreed instead to introduce its own amendment to the bill next Wednesday. |
| Treasury minister Lord Sassoon told peers: "We need to ensure that the Financial Conduct Authority grasps the nettle when it comes to payday lending and has specific powers to impose a cap on the cost of credit and ensure that the loan cannot be rolled over indefinitely should it decide, having considered the evidence, that this is the right solution." | |
| Sources insist it is not a U-turn and that the Financial Services Bill would already have given the FCA some powers to cap payday loans. | Sources insist it is not a U-turn and that the Financial Services Bill would already have given the FCA some powers to cap payday loans. |
| Peers have been told that some loans involve interest rates running into thousands of per cent. | Peers have been told that some loans involve interest rates running into thousands of per cent. |
| Lord Mitchell told peers:" This is an industry run by cowboys on the fringes of legality." He has not withdrawn his own amendment but is expected to do so following the government's move. | Lord Mitchell told peers:" This is an industry run by cowboys on the fringes of legality." He has not withdrawn his own amendment but is expected to do so following the government's move. |
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