Payday loan measures welcomed

 PA

Christian financial advisers have welcomed new measures to control high-interest payday loan companies but say regulation must go further.

The Association of Christian Financial Advisers (ACFA) a ban on rollover credit and a cap on the maximum interest rate.

The Office of Fair Trading yesterday 50 payday lenders 12 weeks to to change their ways or risk losing their licences.

In a damning report, the sector was accused of "irresponsible" lending and "causing misery and hardship".

The report especially criticised the practice of rolling over loans when a borrower has been unable to repay the original loan.

The clampdown includes making lenders clearly display their huge interest rates in advertisements and properly assess whether applicants can afford the loans.

ACFA spokesman Aidan Vaughan said the measures were a "good start" but said codes of practice were needed to stop the manipulation and exploitation of low-income households.

"The rapid increase of 'money shops' in our high-streets is a worrying trend as the effects of recession and stagnant growth erode the limited savings of vulnerable groups," he said.

"While the story may be less appealing than those of bankers' bonuses and the LIBOR rate abuse, this is really of much more importance to ordinary people."

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