OFT attacks “widespread irresponsible lending” among payday lenders

The Office of Fair Trading has given payday lenders three months to “change their business practices” or risk losing their licence.  It also plans to refer the payday industry to the Competition Commission.

In its much anticipated report, the OFT said it had found evidence of“widespread irresponsible lending”, “failure to comply with the standards required of them” and “deep-rooted problems in how lenders compete with each other”.

Debt Advice Foundation Chief Executive David Rodger commented: “We are delighted to see the uncompromising language used and the short time frame given to payday lenders to comply with regulation.

Our experience is that many people take out more and more payday loans in a desperate attempt to stave off debt – a downward spiral which can only ever make their position far worse. So the approach of this report is to be welcomed. 

However we do worry that the worst offenders online – including unscrupulous marketing companies which use some outrageous techniques to provide leads to other lenders – will not be deterred by these new regulations.”

For a summary of the report, go to http://www.oft.gov.uk/news-and-updates/press/2013/20-13#.UTcV0jdGlyF

For the full report, go to http://www.oft.gov.uk/shared_oft/Credit/oft1482.pdf