The Government has recently announced that it will be overhauling how borrowers repay their debts through several changes to be instituted as early as next March, members of the short term loans industry recently reported.
The changes are aimed to give customers of instant cash loans better deals, yet many of the measures have been criticised by industry experts as either going too far or not going far enough. The short term loans industry, in one example will be subject to a review of their code of practice if they offer loans with 1,000 per cent APRs or higher in order to provide enhancements to consumer protection, but industry experts have said that there will be no requirement on these companies to cap their interest rates, even though pressure groups campaigned quite hard for just this change.
The way banks handle overdrafts will be changing from March of next year, as banking customers with current accounts will be eligible to receive emails or text messages to inform them when they are in danger of dipping into the red and incurring an unauthorised overdraft. Meanwhile, the next year will see banks providing buffers to these customers as a grace period to prevent penalties being incurred for slipping anywhere from £5 to £10 into the red.
However, industry experts say that these changes will do little to actually make any real difference to current account customers, especially the poorest ones who are hit hard by punitive and expensive unauthorised overdraft fees Verdict: Little that will make a real difference. Some rejected transactions carry fees of as much as £6 per day, such as the taxpayer-owned Royal Bank of Scotland, while others, such as banking giant Santander, charge a flat £25 fee for dipping into the red.