To provide specific perspective, the fresh FCA’s research subsequently learned that from inside the 2012 and you may 2013 the fresh new mediocre payday loans try ?270 to possess 17 months. The common pricing involved step one.2% on a daily basis, when a variety of even more costs and you will charge was indeed provided. Possibly 4.six mil someone, or around ten% of your own adult population, had removed a quick payday loan in these two years. And you can, having a consumer’s very first mortgage, agencies was ready to give to people with over an effective 50% risk of failing to pay right back the loan – occasionally a reasonable piece more – given that coming fund so you’re able to non-defaulted users was in fact thus winning. The new FCA is worried in regards to the potentially high consequences for these high risk borrowers.
There have been problematic trade-offs between protecting people, to ensure that they’d accessibility borrowing from the bank and you will making sure active race in that business. The study had a need to run around three main concerns:
- Earliest, what the results are in order to firms and you will firms’ financing behavior as a result off a cost cap?