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Osborne makes a U-turn on payday loan sharks

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Issue 2381
A payday loan shop in London after the August 2011 riots

A payday loan shop in London after the August 2011 riots (Pic: sarflondondunc on Flickr)


Tory Chancellor George Osborne did a U-turn on payday loans companies last Monday.

He announced that they needed to be controlled and would have their loan costs capped.

He will add new rules to the Banking Reform Bill currently in parliament.

The loan companies protested that this would limit people’s access to credit and open the way for “illegal lenders”. 

The controls will include a cap on interest rates and limiting penalties for late payment, which can sometimes be as much as twice the original loan amount.  

One firm, Wonga, charges the equivalent of 5,853 percent interest a year on some loans.

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