Payday Lenders Warned Against Misuse Of Direct Debits

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The OFT has warned payday lenders not to misuse direct debt facilities by altering the amount or date of loan repayments.  The regulatory body took action after it found Paydayok (Safeloans Limited) were making multiple attempts to recover missed repayments, without consent from the borrower, which the OFT said would put priority payments such as rent or mortgage at risk.

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As a result of the OFT’s investigation, Safeloans Limitedmust in future:

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The OFT has warned payday lenders not to misuse direct debt facilities by altering the amount or date of loan repayments.  The regulatory body took action after it found Paydayok (Safeloans Limited) were making multiple attempts to recover missed repayments, without consent from the borrower, which the OFT said would put priority payments such as rent or mortgage at risk.

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As a result of the OFT’s investigation, Safeloans Limitedmust in future:

• only take money from the borrower's account on the date or dates set out in the loan agreement, unless otherwise agreed with the borrower in advance
• not change the repayment amount unless this has been specifically agreed with the borrower in advance
• only take money from an account specifically given to Paydayok for the repayment of that loan

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Failure to meet these requirements may result in the company having its Consumer Credit License revoked or fines of upto £50,000 per breach.

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The OFT’s Director of Consumer Credit, Ray Watson, said “'We have made it clear that we will not tolerate companies misusing repayment facilities and we will take action to ensure that unfair terms are not used. Those who offer payday loans must do so responsibly and in accordance with the expected standards”

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To read the full article click here.

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