OFT urged to toughen up on payday lenders - Loans - News - Moneyfacts


OFT urged to toughen up on payday lenders

OFT urged to toughen up on payday lenders

Category: Loans

Updated: 31/05/2013
First Published: 31/05/2013

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Office of Fair Trading (OFT) has been accused of being "too passive" in its approach to regulating consumer credit, particularly with regard to payday loan providers.

A report by the Public Accounts Committee (PAC) claimed the OFT lacks the necessary information and understanding to effectively regulate credit providers and that its reactive attitude risks leaving serious failings and problems undetected.

It also stated that the OFT does not possess a firm enough understanding of how various types of credit are used and how harmful the implications of not complying with regulations can be for consumers.

The OFT has pledged to crackdown on payday loan companies.

A report published earlier this year by the regulator uncovered a series of inappropriate and irresponsible practices by the fifty largest payday lenders. All lenders were issued with a twelve week turnaround period, which expired at the end of this month, in which to address and improve their practices.

Findings from the OFT's follow-up report are due to be published shortly, although the Government has asked the OFT to outline what action has been carried out as a result of the review and what it is doing to revoke the licences of any firms who have failed to comply.

The report stated: "We are concerned that regulation is not addressing the poor practices of some credit providers, which are leading some consumers into serious difficulties and unmanageable debts.

"We have serious reservations about the predatory techniques used by some home-credit providers to sell and target loans to low-income customers, encouraging people who cannot afford it to take out further loans for new expenditure."

What next?

Credit Card Search – find the best credit card for you
Read our tips on how to find the cheap loans here
Loan terminology – glossary and jargon buster

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Regulator to take closer look at high-cost credit

When used well, credit can be a viable way to help make ends meet and balance the books – but the problem comes when that credit is of the high-cost variety. The regulator has will be taking a closer look at the sector to see what else can be done.

The payday loan market is still broken

The payday loan market has been under fire a lot in recent years, and as a result, the financial regulator stepped in. But has it made a difference? Unfortunately, it looks as though there’s still a lot of work to be done.

Get a record low rate loan - if you qualify

Competition in the personal loans market is as hot as ever, so much so that one loan provider has slashed rates to the lowest on record – but only to those who fit the bill. The shopping bill, that is…