July 15, 2014 / 6:25 AM / 3 years ago

Britain to cap rates for payday lenders

1 Min Read

LONDON, July 15 (Reuters) - Britain's financial watchdog set out new rules on Tuesday to cap the sky-high interest rates offered by payday lenders, bringing down the cost of short-term loans criticised for causing hardship and misery among borrowers.

The Financial Conduct Authority said that from January 2015 the interest and fees on new payday loans must not exceed 0.8 percent per day of the amount borrowed. Fixed default fees cannot exceed 15 pounds and the overall cost of a payday loan must not exceed the amount borrowed.

Payday lenders, which are designed to tide borrowers over until payday, have been accused of charging exorbitant fees and tipping households into a spiral of debt. (Reporting by Kate Holton; editing by Tom Pfeiffer)

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