With the soon to be announced news that the FCA is to relax the price cap on lending. Quick Loans has decided that we are to make a rapid return to the loan industry later this year.
In 2014 the FCA were ordered by the treasury to introduce price caps on short term loans. They decided that the cap would be set at a maximum return for lenders of £24 per hundred loaned per month. Though wisely the FCA have always said that this figure was under review.
We have become aware that the FCA have been shocked at the number of lenders that left the industry, the lenders that are currently on the brink of leaving the industry and by the rise in more costly types of lending – including illegal loan sharks.
We have been told, as have other lenders, that the cap is going to be relaxed from £24 per hundred to £32-£36 per hundred on January the 1st 2018. Our industry insiders told us that lenders originally lobbied for the price cap to be lifted to £40 per hundred but that has now been rejected by the FCA. Although the FCA have told lenders that they are keeping this under review and will make a decision in 2019 on further adjustments.
There is also due to be an increase in the total cap of the loan from a ceiling of 100% of the loan, to 200%. At present, the total charges by a lender including late repayments and interest cannot be more than 100% of the original loan – this is to change.
The FCA have conceded that the market has a waterbed effect, where you press down in one area only for it to appear somewhere else. The cap has led to an explosion of stores offering their own types of credit for over priced goods like washing machines, simply because shoppers couldn’t get finance anywhere else. Overpriced washing machine at 0% APR deals appeared all over the place and the FCA was powerless to intervene. Overdraft prices that were more expensive than short term loans and finally the rise in illegal money lenders have all been cited as a reason for the relaxation of the cap.
It is widely acknowledged within the FCA that when former Chief Martin Wheatley said “if the industry shrunk to just 5-6 lenders it would be a good thing”, it was a big mistake. The FCA seem to be taking a more pragmatic approach to the realities of pressures facing borrowers and lenders. Something we have long called for.
With this in mind, we have decided that now is the time to return to lending. We believe that Quick Loans can bring products back to the market to challenge some of the lenders that currently dominate the non-mainstream lending sector.
In addition to returning to lending, we are now recruiting for 12 new positions which will be located in our Barnsley office.
Furthermore we hope that several of those who once called for price caps now publicly admit their folly and apologise to those adversely affected, if not compensate them.