Hollywood star welcomes FCA plan to clampdown on rip-off charges for overdrafts, rent-to-own purchases, and doorstep loans. But he says more can be done to promote cheaper options.
Michael Sheen, star of the Underworld and Twilight sagas, has welcomed news of a clampdown on sky high lending charges. The actor, who appears on the cover of the next edition of Quids in!, was speaking on BBC Breakfast. He added more should be done to promote cheaper options for borrowing and buying goods like furniture and kitchen appliances.
The FCA asked consumers about overdraft charges, ‘deals’ offered by weekly payment stores (rent-to-buy companies like Brighthouse), and doorstep loans. They also looked into how people use catalogue companies, and credit and store cards.
In 2015, the FCA slapped a cap on payday loans companies who exploited customers with unfair practice and charges. This limited daily charges to 0.8 per cent and total fees to no more than 100 per cent of the original loan. The cap saved borrowers a reported £150 million a year. Now the watchdog will consider if similar rules will protect people on low incomes from similar risk.
Andrew Bailey, Chief Executive of the Financial Conduct Authority said: “High-cost credit is used by over three million consumers in the UK, some of who are the most vulnerable in society. Today we have proposed a significant package of reforms to ensure they are better protected.
“The proposals will benefit overdraft and high-cost credit users, rebalancing in the favour of the customer.”
No caps would come into force before 2019 but the FCA claims consumers could save a massive £209.2 million.