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Wednesday 28th November 2012 | 14:53
Big news afoot on payday loans and the long running campaign to cap interest charged by 'loan sharks'*.
I'm told that ministers will today announce that they accept the principle of Labour peer Parry Mitchell's amendment 114d on the Financial Services Bill.
The amendment didn't seek to ban the loans but sought instead to give the Financial Conduct Authority the power to cap interest rates when they cause 'consumer detriment'.
The Government will bring forward their own amendment at 3rd reading, so a vote today seems unlikely.
Moreover, in what seems an unusual move, it seems that Mitchell and other signatories to the amendment such as Justin Welby (the incoming Archbish) and Lady Howe will get a 'veto' over the wording of the Government amendment - to make sure it fits with their objectives.
It looked like the Government was heading for a defeat today and decided to if you can't beat em, join em. But the detail of the Government proposal will be closely scrutinised. It isn't totally what campaigners want, but it goes a long way to making a concession.
Yet again, it seems Lib Dem peer and close Clegg adviser Lord Rennard has played a key role.
Let's see if the promises materialise into something concrete.
(As a consequence of today's vote being pulled, it is likely that a separate payday loans amendment from John McFall will be heard instead).
*FOOTNOTE: I blogged earlier this week on this very topic. For background see HERE.
UPDATE: Treasury sources say a power to cap was always in the bill and ministers have felt the bill was always a 'good news' story for the Coalition. But if crossbenchers need further reassurance on the wording, HMT seems happy to give in via new amendment.
Under the Bill, the Government is making “the offering of credit by way of business” a regulated activity for the first time. So from April 2014, when the FCA is satisfied that it is “necessary or expedient” for the purpose of protecting consumers, it will be fully empowered to make rules that impose restrictions on pay day lenders. Treasury sources insist this has been in the bill for months.
The Bill empowers the FCA to impose a limit on the cost of credit to consumers. The amendment is seen as "absolutely in line" with the Government’s vision of how the FCA should work in the interests of consumers.Ministers believe the FCA should not hold back from using its power to protect consumers. The text will be finalised when the Government brings forward measures at Third Reading next week.
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