OFT action on payday loans
The Office of Fair Trading has referred the payday lending industry to the Competition Commission because of concerns it has about "deep-rooted" problems with the way competition works.
The Office of Fair Trading has referred the payday lending industry to the Competition Commission because of concerns it has about "deep-rooted" problems with the way competition works.
Citizens Advice welcomed the Office for Fair Trading's (OFT's) decision to refer the payday lending industry to the Competition Commission for a full investigation, saying the lenders' focus on speed "means proper checks fall by the wayside".
Chief executive Gillian Guy claimed payday lenders are "recklessly quick to hand out loans" and should instead focus on the "cost of credit and how they treat customers".
Ms Guy said: "Citizens Advice evidence found that in 64% of cases loans come without any checks to make sure the borrower can afford to repay, revealing that lenders aren’t taking the time to establish whether a payday loan is suitable for the customer.
"Debts quickly spiral out of control as those struggling to repay are hit with high interest rates and charges.
"The industry is in desperate need of a transformation from predatory firms to a responsible short-term credit market.”
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