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Payday lending summit is called by ministers
Lenders, regulators and government ministers are being summoned to a summit about the UK's payday loans industry next week. The meeting aims to come up with solutions to the "widespread irresponsible lending" highlighted by a regulator's recent report into lenders. It will be the first time that representatives of all of these groups have met together in one room. A key decision on competition in the sector will be announced beforehand. The Office of Fair Trading (OFT) is expected to finalise its view this week on whether the payday lending industry should be referred to the Competition Commission. In March, the OFT said it had found "deep-rooted" problems in how payday loan companies competed.....Read more here-
#15corpio commentedEditing a commentThe Office of Fair Trading (OFT) has referred the payday lending industry to the Competition Commission because of concerns about "deep-rooted problems with the way competition works". The OFT said it found that customers found it difficult to identify or compare the full cost of payday loans. The OFT added that there were barriers to switching between lenders when loans were "rolled over". It was also concerned that competition was based on speed rather than cost. "The competitive pressure to approve loans quickly may give firms an incentive to skimp on the affordability assessment which is designed to prevent irresponsible lending and protect consumers," the OFT said in a statement. The OFT also said that some of the business models of companies operating in the payday loans industry were causing concern, because they were "predicated on making loans which are unaffordable, leading to borrowers paying far more than expected through rollovers, additional interest and other charges". It said that lenders appeared to make 50% of their revenues from such practices.....Read more here
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