If you take out a short-term loan in the UK today, the price you pay is shaped by rules that have been in force for over a decade. The Financial Conduct Authority (FCA) price cap, introduced in January 2015, sets a hard legal limit on what any lender can charge you on a payday or other high-cost short-term loan. More than ten years on, it still defines the entire short-term lending market, and understanding it gives you genuine power as a borrower.
This guide explains what the cap covers, what it means in real pounds and pence, and how Fast Loan UK operates within it.
The FCA price cap applies specifically to a defined category called high-cost short-term credit, often shortened to HCSTC. The rules cover any credit product with a representative APR of 100% or more that is due to be repaid, or substantially repaid, within 12 months. Payday loans, short-term instalment loans, and similar products all fall within that definition.
The cap does not cover secured loans, authorised overdrafts, credit cards, personal loans with APRs below 100%, buy-now-pay-later products, or community finance such as credit unions. Those products have their own separate regulatory frameworks. Knowing the scope matters, because it tells you exactly which loans carry these legal protections and which do not.
The FCA price cap has three components that work together. Together, they set a hard ceiling on every cost a lender can pass on to a borrower across the life of a loan.
| Component | The Rule | What It Means for You |
| 0.8% Daily Interest Cap | Maximum 0.8% per day on the outstanding balance | Interest and fees combined cannot exceed 0.8p per day for every £1 borrowed |
| £15 Default Fee Cap | Maximum £15 one-off default charge | If you miss a payment, the lender cannot charge more than £15 as a fixed default fee |
| 100% Total Cost Cap | Total charges cannot exceed 100% of the amount borrowed | You will never repay more than double what you originally borrowed, no matter what |
The 100% total cost cap is arguably the most powerful protection of the three. No matter how long a loan runs, how many times a payment is missed, or what fees are applied, the total amount you repay in interest and charges cannot exceed the amount you originally borrowed. If you borrow £300, you will never repay more than £600 in total. That is a firm legal limit that still applies to every HCSTC loan today.
The 0.8% daily cap applies to the outstanding principal. The calculation is straightforward: multiply the daily rate (0.8%) by the number of days the loan runs, and then by the amount borrowed. For a 30-day loan of £100, the maximum chargeable interest is £100 x 0.008 x 30, which equals £24. The lender cannot charge a penny more in interest or fees during that period, unless you default, in which case a single £15 charge can be added, subject always to the 100% total cap.
Abstract percentages can be hard to translate when you are deciding whether a loan is manageable. The table below shows the maximum a lender could legally charge at different loan amounts and terms.
| Amount Borrowed | Loan Term | Max Daily Interest (0.8%) | Max Interest Over Term | Absolute Max Repayable (100% Cap) |
| £100 | 30 days | £0.80 | £24.00 | £200 |
| £300 | 3 months (91 days) | £2.40 | £218.40 | £600 |
| £300 | 6 months (182 days) | £2.40 | Capped at £300 (100% rule applies) | £600 |
| £500 | 6 months (182 days) | £4.00 | Capped at £500 (100% rule applies) | £1,000 |
On longer terms, the 100% total cost cap often kicks in before the 0.8% daily rate would reach its natural limit. The two caps work together to keep a meaningful ceiling on costs. Most responsible lenders charge considerably less than the maximum permitted, and your actual repayment figures will differ from these maximums.
For a real-world example, at Fast Loan UK, borrowing £300 over 6 months currently results in 6 monthly repayments of £84.58, giving a total repayment of £507.48. That total sits well within the FCA’s 100% cap, which would allow up to £600 on a £300 loan.
It is easy to think of the price cap as a piece of historical regulation, but it continues to influence the market in ways borrowers benefit from every day.
Before the cap came into force in January 2015, some short-term lenders were charging daily interest of 4% or more, with representative APRs running into the thousands. A £300 loan left unpaid for 90 days could rack up over £1,000 in interest alone. Rollovers, where borrowers extended loans repeatedly, made this far worse. The FCA estimated at the time that around 1.8 million people in the UK were using high-cost short-term credit, and a significant proportion were experiencing real financial harm.
When the cap took effect, lenders that could not operate profitably within it left the market. The most well-known example was Wonga, but the wider clean-up reshaped the entire sector. Today, every FCA-authorised short-term lender operates within the same legal limits, which is precisely what the regulation was designed to achieve.
The cap also shapes lender behaviour beyond pricing. Because total costs are capped, lenders have a much stronger commercial incentive to assess affordability properly at the outset, which means tighter lending decisions and fewer borrowers being given loans they cannot realistically repay. The protection is therefore both financial and structural.
Every UK lender offering high-cost short-term credit must be authorised by the FCA. You can verify any lender’s status using the Financial Services Register, a free public database. Search the lender’s name or FCA reference number, and you will see their authorisation status, the permissions they hold, and whether any restrictions apply.
If a lender is not on the register, they are operating illegally, and you should not borrow from them whatever the terms. Checking the register takes under two minutes and is one of the most important steps you can take before signing any loan agreement.
| Fast Loan UK and the FCA Price Cap
Fast Loan UK is authorised and regulated by the Financial Conduct Authority under reference number 673907. You can verify this directly on the FCA Financial Services Register. Every loan we offer is priced within the 0.8% daily cap, the £15 default fee limit, and the 100% total cost cap. Fast Loan UK is part of JDB Enterprise Group Limited and has operated in the UK short-term lending market for over 10 years, with a deliberate focus on ethical, transparent lending. Compliance with the cap is not treated here as a minimum standard. It sits within a broader commitment to responsible lending that includes affordability checks, support for customers in financial difficulty, and additional protections for those in vulnerable circumstances. |
The cap is specific to high-cost short-term credit. It does not apply to authorised overdrafts, credit cards, personal loans with APRs below 100%, secured loans, buy-now-pay-later products, or credit unions. Some of those products can still carry significant costs, but they fall under different regulatory frameworks. If you are comparing borrowing options, always check which rules apply to the specific product you are considering, and read the representative example carefully before applying.
If you believe a lender has charged you more than the FCA cap permits, you have clear routes to challenge it.
Start by raising a formal complaint directly with the lender. FCA-authorised firms are required to operate a complaints process and must respond within eight weeks. If the lender does not resolve your complaint satisfactorily, you can escalate to the Financial Ombudsman Service, which is free to use and can order redress if a breach is upheld. You can also report concerns about a lender’s conduct directly to the FCA. Keeping records of your loan agreement, payment history, and any correspondence with the lender will support your case considerably.
For free, impartial guidance on debt and borrowing more generally, MoneyHelper, StepChange Debt Charity, and Citizens Advice all provide support at no cost.
The 0.8% daily cap applies to the outstanding principal, meaning the amount you originally borrowed. It does not compound on accumulated interest. If you borrowed £200, the daily interest charge cannot exceed £1.60, and the total cost including all charges can never exceed a further £200 under the 100% cap.
Yes, but the 100% total cost cap overrides everything. A lender can charge up to 0.8% per day in interest and fees and up to £15 as a one-off default charge if you miss a payment, but the combined total of all charges across the entire loan can never exceed the amount you originally borrowed.
The FCA price cap on high-cost short-term credit came into force on 2 January 2015. It was introduced following a direction from Parliament under the Financial Services (Banking Reform) Act 2013, which required the FCA to set rules limiting the cost of payday loans and similar products.
Yes. The FCA price cap remains in force and continues to apply to every authorised lender offering high-cost short-term credit in the UK. The 0.8% daily rate, the £15 default fee limit, and the 100% total cost cap have been the legal standard since 2015 and still set the maximum a borrower can be charged today.
The cap provides a hard ceiling on what you can be charged, including during periods of default. It works alongside, not instead of, a lender’s obligations around responsible lending and financial difficulty support. FCA-authorised lenders are required to treat customers in financial difficulty fairly, which includes considering repayment plans and signposting to free debt advice services such as MoneyHelper or StepChange. If you are struggling, contact your lender as early as possible.
