Finance Glossary

FCA Cost Cap

Rules introduced by the Financial Conduct Authority in January 2015 that limit the total cost of high-cost short-term credit (including payday loans). Under these rules, lenders cannot charge more than 0.8% interest per day, default charges cannot exceed £15, and the total amount repaid can never exceed 100% of the original loan — meaning you can never repay more than double what you borrowed.

Example

If you borrow £200 under the FCA cost cap, the maximum you can ever be asked to repay — including all fees, interest and charges — is £400.