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Payday lenders called to summit

Payday lenders called to summit

Category: Loans

Updated: 25/06/2013
First Published: 25/06/2013

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Representatives from payday loan companies, financial regulators and MPs are expected to be called to a conference to tackle irresponsible lending in the sector, following an investigation by the Office of Fair Trading (OFT).

In March this year, the OFT gave payday lenders a twelve week period in which to improve their practices and become fully compliant, following an investigation of the industry which uncovered evidence of "deep rooted" problems, including aggressive debt collection methods and inadequate affordability checks.

The OFT is expected to confirm over the next few days as to whether the results of its latest review into payday lenders' conduct warrants referring the sector to the Competition Commission.

Payday lending has boomed over recent years. Believed to be worth billions of pounds, the industry has been blasted by consumer groups for charging rates as high as 4,000% APR.

The OFT and Citizens Advice Bureau have both claimed millions of people, particularly vulnerable customers who are unable to pay back the money on time, are at risk of descending into a spiral of debt as a result of borrowing from payday lenders.

In an earlier statement, the OFT said: '"We are proposing to refer this market to the Competition Commission, which has wider powers to get to heart of the problems in this market and to identify and impose lasting solutions that protect consumers.

"Irresponsible lending is not confined to a few rogue payday lenders - it is a problem across the sector."

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