OFT Launches Review into Payday Lending

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On February 24, the OFT launched a review of the payday lending sector, to be carried out alongside enforcement actions being taken within the payday lending sector, as a result of concerns that certain payday lenders were taking advantage of people in financial difficulty.

The OFT will carry out on-site investigations of 50 major payday lenders and review whether they are complying with both the Consumer Credit Act and its guidance on irresponsible lending. The review will focus on: (i) loans which are given to borrowers without sufficient evaluation of repayment likelihood; (ii) inappropriate targeting of groups; and (iii) rolling loans which result in escalating charges.

The OFT intends that the review will increase industry standards, improve customer protection and force non compliant payday lenders to give up their licenses.

 


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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