Osborne denies departure from free markets in capping payday loans

The UK will introduce a cap on payday loans, the chancellor announced this morning. The level of the cap will be determined by the Financial Conduct Authority and will be included in the banking reform bill.

Asked on Radio 4's Today programme whether the he had departed from a free market world view, the chancellor replied "I don't think it's departure from any philosophy" he continued "we want regulated markets that work for people."

The Treasury has claimed that there is "growing evidence" supporting a cap on the cost of credit notably from Australia.

Attacks on payday lenders have intensified in recent months, with Ed Miliband calling for bans of payday loan advertising during children's TV. The Labour MP, Stella Creasy told Radio 4's Today programme:

This industry's a bit like an inflated balloon and if you don't crack down on the whole cost of credit then wherever they can recoup their costs by expanding the prices at other points they will.

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