OFT acts against leading payday lenders

The OFT is giving the leading 50 payday lenders, accounting for 90 per cent of the payday market, 12 weeks to change their business practices or risk losing their licences, after it uncovered evidence of widespread irresponsible lending and failure to comply with the standards required of them. The OFT has also today announced that, subject to consultation, it proposes to refer the payday lending market to the Competition Commission after it found evidence of deep-rooted problems in how lenders compete with each other. The action was announced in the final report on the OFT's compliance review of the £2 billion payday lending sector. The review found evidence of problems throughout the lifecycle of payday loans, from advertising to debt collection, and across the sector, including by leading lenders that are members of established trade associations.

Particular areas of non-compliance included:

lenders failing to conduct adequate assessments of affordability before lending or before rolling over loans
failing to explain adequately how payments will be collected
using aggressive debt collection practices
not treating borrowers in financial difficulty with forbearance.

The fifty leading lenders, each of which was inspected, will have to take rapid action to address the specific concerns the OFT identified with each of their businesses. They must demonstrate within 12 weeks that they are fully compliant, or risk losing their licence. Failure to cooperate with this process will trigger enforcement action....Read more here

Stricter rules expected for payday lenders - allaboutFORUMS

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5corpio commented

2 April 2013, 08:06

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Farce as long-awaited crackdown into payday lenders is set to be delayed by months

The promised clampdown on payday loan companies will be delayed by months after it emerged that some of the firms have still not been given a formal warning of their offences. The Office of Fair Trading this month warned 50 loan firms they had 12 weeks to clean up their act or face losing their licences. In its statement on March 6, the OFT described the steps as 'a top enforcement priority'. But almost four weeks later, Financial Mail has learnt that several firms have still not received letters detailing where they have breached the law and the remedial action required. Receiving the letter triggers the 12-week notice period.

The OFT is expected to take another two weeks to contact firms. This means the deadline will stretch beyond the end of May. The watchdog said it had decided to manage the volume of cases by staggering communication with firms. This would also mean it could deal with responses better. After receiving responses it will also need time to review and possibly take action, which could take the process into late summer. However, the delay was criticised by campaigners hoping the 'legal loan sharks' would be brought swiftly in line with the law. ......Read more here

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OFT acts against leading payday lenders

OFT acts against leading payday lenders