The Financial Conduct Authority (FCA) has finalised new rules for governing the £200bn consumer credit market that includes approximately 50,000 firms.
Effective from 1 April 2014, the new rules will bring changes to how payday lenders and debt management companies treat their customers.
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Some of the changes include limiting the number of loan roll-overs to two, restricting the number of times a firm can seek repayment using a continuous payment authority (CPA), provide information to customers on how to get free debt advice, and pass on more money to creditors from day one of a debt management plan.
Additionally, the new rules will provide FCA the power to prohibit any misleading adverts from payday lenders and will give consumers additional protection from fraud practises.
FCA CEO, Martin Wheatley, said millions of consumers access some form of credit each day, from paying for everyday goods by credit to taking out a payday loan.
"We want to be sure that the market works well when people need it – whether that’s for one day, one month or longer.
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By GlobalData"Our new rules will help us to protect consumers and give us strong new powers to tackle any firm found to be overstepping the line," Wheatley added.
