The Office of Fair Trading has spent a year looking at the industry and found widespread evidence of lending and irresponsible act violations. He said borrowers suffered ' misery and difficulties "because of fundamental problems with the way lenders exploited, putting speed on everything else.
Citizens charitable boards reported that among 2,000 loans with 113 lenders, in nine out of 10 cases, the borrower has not been asked to provide documents to show that they could afford the loan. Among those who had repayment problems, seven out of 10 said they had been put under pressure to extend the loan, while 84 percent said that they had not been proposed a freeze on interest rates and fees when they said that they were struggling to repay.
What is being done to protect consumers?
The OFT has closed three lenders in 2013 thus far, and has called on the industry to the competition Commission, which will be able to insist on improvements.
In April 2014, regulations will pass by the OFT to the authority of financial ethics, and its leader, Martin Wheatley, has promised to crackdown on abusive practices. In the meantime, the OFT said loans payday would remain a priority of execution. In February, it has the power to suspend a permit of lender immediately if she believed there is detriment of consumers, and it can use it on if needed payday loans companies.
Member of Parliament Paul Blomfield introduced a draft Bill to Parliament calls for control over advertising and marketing, clearer information on costs, and the caps on loans and fees, and the consumer Minister has called a Summit of industry to discuss whether more regulation is needed.