Capping payday loans: some praise for George Osborne

I don’t get the opportunity very often to applaud the actions of the current government, so it’s with some pleasure that I note the Chancellor’s commitment to cap payday loans.  The Financial Conduct Authority will be required to impose a cap, which they already have the power to do but haven’t exercised.  The cap is intended to cover not only the cost of loans, but initial costs, continuing payment authorities and the standard methods of milking debtors for more.  Comparisons are being drawn with Australia, where the cap is 20% startup plus 4% per month, or Canada, where the annual top rate is 60%.  Either of those goes rather further than the minimal measures I’d tentatively proposed on this blog.

Osborne went further in his comments.

“I don’t accept it’s a departure from any philosophy.  The philosophy is we want markets that work for people, and people who believe in the free market, like myself, want that free market to be properly regulated.”

Given his apparent preference for a minimal state, this restatement is very welcome; I trust the same clarification will now extend to some other spheres, including employment, finance, energy and housing provision.

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