The OFT refer payday loans to Competition Commission

27 June 2013

stock_payday_loans It's happening. Payday lenders are being sent to face a probing from the Competition Commission after the Office of Fair Trading sent them toward the regulator this morning.

The OFT warned of "deep-rooted problems" and that "features of the payday lending market prevent, restrict or distort competition". And they're making people's lives miserable, by having business models that are based on making loans which are unaffordable, which means people are paying far more than expected through additional interest and charges.

The OFT deduced that these firms make up to half of their revenue from these dubious practices. Most worrying of all, the OFT found that many of these lenders appear to be targeting people with poor credit histories and limited access to other credit.

Payday loan companies could be tripped up because they are weakening competition in price among lenders because they are competing solely on the availability and speed of loan approval, rather than price.

Clive Maxell, OFT chief executive, said: "Competition appears not to be working properly in the payday lending market, allowing firms to profit from making loans that cannot be paid back on time."

There'll be a Westminster summit on the sector next week as well and the councils in Haringay and Cheshire have blocked payday lender websites from their public computers. A number of universities have banned all advertising from payday loan companies, while a host of football teams have turned down sponsorship deals from such lenders.

The OFT will continue to hound payday firms while referring these loan businesses to the CC. It looks like curtains for payday loan companies.

TOPICS:   High Street News   Consumer Advice   Debt

8 comments

  • Sicknote
    So the OFT have proved time and time that they have no teeth and as bad as payday loan companies are they are not breaking any laws; only guidelines. If we set competition aside for one moment and look at the 'And they’re making people’s lives miserable' comments , I would be expecting that people were in misery before they ever consider a payday loan. What's needed is more co-operative lending facilities based in the communities who can not only lend but coach their customers to manage debt and importantly reduce their debt overall.
  • shiftynifty
    Well said sicknote...And considering it`s only been referred to Competition Commission....I doubt much will change, as any interest cap has to done by the financial conduct authority...who are not in charge till next april....doh!
  • jiggle
    Holy crap, intelligent comments! CHEWBACCA COME BACK I'M SCARED.
  • chewbaccas d.
    whats up cunts?
  • chewbacca's c.
    Not read the article but here goes...... whatever the article is all about is a load of old bollocks and anyone who fell foul of whatever it was that happened, it's their own fault for being too poor, stupid or unemployed or something. Or an immigrant. And the entire article is wrong or some such shit. I only do this for human interaction. Fucking morons. I love me.
  • Cash A.
    My buddy proposed I would potentially like this website. He / she used to be completely appropriate. The following put up actually built our working day. You are unable to consider exactly how much occasion I had put in due to this information and facts! Thank you!
  • Teddy E.
    All the authorities have to do is limit the AER these loan sharks charge to 750%. If they can't make a profit out of that then tough.
  • Speed L.
    [...] The OFT refer payday loans to Competition Commission – Payday loan companies could be tripped up because they are weakening competition in price among lenders because they are competing solely on the availability and speed of loan approval, rather than price. Clive Maxell, OFT chief executive, said … [...]

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