The Financial Conduct Authority has decided to keep the statutory price cap on high-cost short-term credit unchanged after a 2026 review found no strong case from industry or consumer groups to loosen the limit that has governed payday lending since 2015.
The regulator said in updated guidance published this month that it engaged lenders, debt charities and trade bodies on whether the cap — which limits the total cost of payday loans — still struck the right balance as living costs remain elevated. While some firms argued that a tighter economy increases demand for emergency borrowing, charities warned that any relaxation would push vulnerable households back toward cycles of rollover debt.
What the cap does
Parliament tasked the FCA with introducing the cap in 2013 after annualised rates on some products exceeded 4% per day. The rules took effect in January 2015 alongside restrictions on rollovers and how lenders collect recurring payments. A 2017 FCA review found cheaper loans and better affordability checks; the 2026 exercise was the next scheduled look at whether market conditions warranted a change.
Rather than commission a full quantitative stage this autumn, the FCA said it would monitor the market using new consumer credit product sales data and other supervisory feeds. That decision effectively preserves the status quo while giving the regulator flexibility to reopen the question if arrears spike or if new entrants circumvent the cap through unregulated products.
Broader consumer credit agenda
The unchanged cap sits alongside a wider modernisation push. The government’s Consumer Credit Act reforms, announced in May 2026, will eventually move many prescriptive disclosure rules into the FCA handbook so card and loan information can be updated as products evolve. The Financial Services and Markets Bill carrying those changes is progressing through Parliament, with firms expecting consultations on how promotional APRs and overdraft warnings will look once statutory wording is trimmed.
For credit card holders — a separate but adjacent market — existing FCA persistent-debt rules still require lenders to intervene after 18 months of minimum payments and to offer repayment plans after 36 months. The consumer finance priorities paper published by the FCA highlights responsible lending and early support for borrowers in difficulty as its central themes for the next year.
Who wins and who loses
Listed lenders with payday exposure have largely exited or rebranded since the cap’s introduction; remaining specialists operate smaller books under tight affordability tests. Debt advisers welcomed confirmation that the ceiling stays, arguing that energy and rent shocks already stretch household budgets without adding higher legal lending rates.
Some trade groups continue to press for “innovation space” under the forthcoming CCA regime, particularly for open banking-based short-term facilities. The FCA expects a statutory instrument on open banking in the fourth quarter of 2026, with consultations on a long-term regulatory framework to follow.
Practical takeaway
Borrowers shopping for emergency cash should still compare authorised firms on the FCA register, watch for unregulated buy-now-pay-later hybrids that fall outside the cap, and use free debt advice services if repayments become unmanageable. The cap’s survival means the price of legal payday credit will not fall — but it also will not jump overnight, preserving a decade-long settlement that both sides now treat as the baseline.