The OFT refer payday loans to Competition Commission
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.