In its latest report, entitled “Credit 2.0”, the CFA suggested that despite the low levels of inflation and rising household incomes, the level of personal debt in the UK is increasing. This, the CFA said, meant that Britons were borrowing again. The body added that changes in the economy have resulted in a higher demand for short-term credit.In April 2014 the Financial Conduct Authority (FCA) took over the regulation of consumer credit. It set a cap on the cost of payday loans of 0.8 per cent of the amount borrowed per day, as well as a £15 cap on default charges. However, the CFA has suggested that despite there having been a 20 per cent increase in applications for short-term loans between September 2013 and August 2014, there was also a reduction in the volume and value of loans. The number of firms operating in the market has dropped from 240 in 2013 to 40 in 2015. Furthermore, 80 per cent of loans are being rejected. This has led to an estimated 310,000 families being in contact with illegal lenders in the UK, the CFA said. It added: “The illegal money lending team believes this figure to be an underestimate.” Read more about payday loans:
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