Payday lenders in the UK have agreed to a new code of conduct to prevent some of their vulnerable users being caught out by excessive interest payments and hidden charges. The OFT have been keen to ensure all payday companies follow a set of rules that will prevent their customers from worsening there financial situation and thus prevent those getting themselves into further debt.

All interest charges must now be frozen after a 60 day period. This will prevent debts from snowballing and becoming unmanageable. In the past, various payday companies have kept pilling up the charges although their customers have informed them that they can't make the repayments. The situation often worsens until the customer has nowhere to turn.

The lenders must now operate more honestly and give full details of all charges and interests rates to customers before any loan is given. Reports of customer receiving charges they did not agree to has called for this new rule to be set in place.

Members of the government including the prime ministers are reported to be pleased with the outcome and looking to work with payday lenders to improve their current reputation. There is an understanding that payday loans fit a certain niche in the market that the commercial banks do not want to fill due to their high risk. Payday loans can be the helping hand that prevents desperate people from turning to illegal loan sharks and getting themselves into serious trouble.

Looking at the judgement I'm pleased that these new rules have been set in place to make sure the vulnerable are taken care of. If the banks aren't willing to do short term loans then some one has to. As long as the payday companies are monitored I can only see this as a good thing, although Id like to suggest only taking a payday loan only in dire circumstances.

Make sure you pick a reputable company so you know they are being regulated by the new rules set forth by the OFT such as http://www.cashpaydayloansonline.co.uk/

This article was written by Liam Thomas, from http://www.cashpaydayloansonline.co.uk/