Friday, 02 January 2015 13:18

The Payday Loan Cap – FCA and the Farce

We have to laugh, today we embark on a new cheaper day for lending in the UK. Really, is that really what is going on? There are still a few strange people who think the price cap will save people money – unfortunately you can’t educate pork.

Look at the conversation we have had today with one applicant today. This is 100% genuine, we are not making this up.

 

Applicant: I need to borrow £200. I have just applied but your results page says I have to borrow £1500

Easy Loans: Dear ** ****** unfortunately we can no longer lend £200 because of the costs involved. You have to take £1500 over a year.

Applicant: Let me get this right, you can’t lend me £200 but you can loan me £1500?

Easy Loans: Dear ** ****** that is correct

Applicant: But that’s more expensive for me and you are lending me money I don’t need.

Easy Loans: Dear ** ****** We agree, it is just no longer affordable to lend £200 as we would only make £48 for a month and from that we need to take out all our costs and it doesn’t add up for us.

If we lend you £1500 at 300% then we earn around £1000 over the year.

Applicant: But I don’t need it over a year and I don’t need £1500.

Easy Loans: Sorry those are the new rules from the FCA. You need to borrow £1500 over 12 months or nothing, it’s the minimum we now do.

Applicant: This is ****** up I don’t need £1500

Easy Loans: Welcome to our world :-)

 

We are now in the crazy world of people only being able to get small loans if they have great credit, whilst people with poor credit can only get higher valued loans. This person is now £1500 in debt, when they only anted to be £200 in debt - socalled Money Experts strike again. On behalf of Easy Loans, thanks you are making us a fortune - lending never been so good. On behalf of customers - ouch! 

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Update 27-05-2015

The FCA have been intouch to express their concerns over the accuracy of this story. We agree with some of their concerns and dispute others. The FCA question our reply

"Easy Loans: Sorry those are the new rules from the FCA. You need to borrow £1500 over 12 months or nothing, it’s the minimum we now do."

This is correct and at the same time wrong depending on how you read it, the FCA's rules forced lenders like us from the market and we no longer offer loans of under £1000 - that is 100% true. Another way of looking at it means we have worded it wrongly and the FCA are correct in that there are no specific FCA rules that prohibited loans of under £1500 or even £1000 and other lenders do still offer them.

The FCA also ask us to clarify that the individual was not declined by us for a lower vauled loan and then offered a higher one by us. The applicant was declined by us and was then presented with a advert from a different lender through a ad network called Google Adwords.  

In general the FCA are concerned that those reading this article will see it as a incentive or stand a better chance of being accepted if they borrow more than they need. We have anecdotal evidence to say that is true. Since the Payday cap was introduced, we have seen lenders - including ourselves - leave the lower valued loans market and moved into the higher valued, longer term loans. We call for the removal of the payday cap so that credit providers can flow back into the lower valued loans market.

 

"Easy Loans" is a trading name of Quick Loans Ltd is registered in England and Wales. Authorised and regulated by the Financial Conduct Authority under registration number 763132

Offers of credit are only available to people over the age of 18

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