The Office of Fair Trading has announced an investigation into Payday Loans lenders. And not before time says Shaun Underhill a Partner at Winchester based solicitors Shentons: “There are several good reasons to welcome this investigation. There are just too many concerns to ignore.”
The OFT has written to all 240 payday loan providers seeking information. The major areas being looked at include:
- The advertising used and who it is targeted at, with concerns that the lenders may be targeting people who are in financial difficulty;
- Whether lenders are encouraging people to roll over their loans;
- Whether lenders are failing to carry out proper credit and affordability checks;
- And lastly, the debt collection procedures lenders use, with allegations being made of aggressive telephone calls and borrowers being quoted exorbitant collection penalties.
Shaun Underhill comments: “This is a form of lending which has grown enormously in the last few years, and up to now it has largely escaped major scrutiny. This investigation is overdue, and the OFT seem to have drawn up a comprehensive list of issues to be looked at. With this type of loan, if borrowers get into difficulty, the financial consequences can very rapidly become overwhelming.”