Dramatic fall in customers 'rolling over' payday loans

The number of people "rolling over" their payday loans into a second month or more has reduced by three-quarters since tighter of the industry came into effect, an association representing the industry has said.

Many lenders allow customers to renew their borrowing month-on-month if they are unable to afford repayments - usually incurring extra costs.

Russell Hamblin-Boone, Chief Executive of the Consumer Finance Association, said Wonga's announcement of redress for thousands of customers who had fallen into arrears was representative of "the new lending landscape".

Tighter affordability checks from the Financial Conduct Authority had also meant a dramatic fall in the number of payday loans had been granted, he added.

Hamblin-Boone pointed out that a new "cost of credit cap" on the industry would control the prices of the loans, while further measures restricting the industry are due to be announced before the end of the year.