07.03.2013
The Office of Fair Trading (OFT) has found widespread evidence of irresponsible lending and breaches of the law across the payday sector. The damning report, which follows a year long review of the £2bn sector, said too many people were being granted loans they could not afford to repay, and lenders’ revenues were heavily reliant on customers failing to repay their original loan in full and on time. The OFT said that lenders were competing on speed and ease of access rather than interest rates and were not carrying out proper affordability checks.
The OFT inspected 50 leading firms, representing 90% of the market, and said all needed to make changes to their practices. It gave them 12 weeks to do so, with the threat of losing their credit licence if they fail to comply.
The CDFA’s members know only too well the consequences of multiple payday loans and extremely high interest rates. Our members, such as Scotcash, lend only to those who can afford to repay, lend at affordable rates and also offer money management advice.
What next?
Read more about how CDFIs help consumers access affordable and fair finance
Read the Guardian’s statistics on the payday lending industry