If you provide high-loans, there are specific rules that you will need to comply with from 1 June 2020.
Watch the Commission’s webinar about high cost loans.
High-cost lending to consumers is now subject to specific restrictions that do not apply to other forms of lending.
The key restrictions on high-cost lending are:
interest and fees charged on a high-cost loan are capped at 100% of the amount first advanced
the rate of charge (excluding default fees) on a high-cost loan is capped at 0.8% per day
lenders are restricted from making high-cost loans to some repeat borrowers
lenders have extra disclosure obligations.
We have developed guidance which explains these key restrictions. The specific rules are set out in the Credit Contracts and Consumer Finance Act 2003 and the Credit Consumer and Consumer Finance Regulations 2004. These rules are complex, and lenders are encouraged to take legal advice to ensure that they operate within the restrictions.