– David Fisher, OFT Director of Consumer Credit
We have uncovered evidence that some payday lenders are acting in ways that are so serious that we have already opened formal investigations against them. It is also clear that, across the sector, lenders need to improve their business practices or risk enforcement action.
Our report shows that a large number of payday loans are not repaid on time. I would urge anyone thinking about taking out a payday loan to make sure they fully understand the costs involved so they can be sure they can afford to repay it.
The actions are set out in a progress report published as part of the Office of Fair Trading's compliance review of the payday lending sector. It highlights concerns about:
- The adequacy of checks made by some lenders on whether loans will be affordable for borrowers.
- The proportion of loans that are not repaid on time.
- The frequency with which some lenders roll over or refinance loans.
- The lack of forbearance shown by some lenders when borrowers get into financial difficulty.
- Debt collection practices.
The Office of Fair Trading has just launched a new investigation into payday loans. Officials are today writing to all 240 payday firms warning them of bad practices.
The Office of Fair Trading says debt collection and affordability checks are big concern.