50 payday lenders face ban - warning from OFT

[honeybee13]

I just had this from the Telegraph.

 

http://www.telegraph.co.uk/finance/personalfinance/borrowing/loans/9911974/50-payday-lenders-face-ban.html

 

 

 

Payday lenders have been given 12 weeks to change their business practices or

risk losing their licences, following an investigation by the consumer

regulator.

Edited March 6, 2013 by citizenB

[stu007]

Hi

 

very interesting just seen this on the news as well and this is the OFT press release link:

 

 

 

 

 

OFT acts against leading payday lenders and proposes to refer the sector to

Competition Commission

 

 

The OFT is giving the leading 50 payday lenders, accounting for 90 per cent

of the payday market, 12 weeks to change their business practices or risk losing

their licences, after it uncovered evidence of widespread irresponsible lending

and failure to comply with the standards required of them.

 

 

The OFT has also today announced that, subject to consultation, it proposes

to refer the payday lending market to the Competition Commission after it found

evidence of deep-rooted problems in how lenders compete with each other.

 

read more : www.oft.gov.uk/news-and-updates/press/2013/20-13

Edited March 6, 2013 by citizenB

[citizenB]

 

The leading 50 payday lenders, accounting for 90pc of the market, came under

fire from the Office of Fair Trading (OFT), which said it had uncovered

evidence of widespread irresponsible lending.

 

 

 

 

"Payday lenders are earning up to half their revenue not from one-off loans,

but from rolled over or refinanced deals where unexpected costs can rapidly

mount up."

 

 

The Office of Fair Trading (OFT) carried out spot checks of 50 major lenders

and obtained information from all 240 lenders in the market in a year-long

probe into the £2bn payday sector.

 

 

read more : http://www.telegraph.co.uk/finance/personalfinance/borrowing/loans/9911974/50-payday-lenders-face-ban.html

[sillygirl1]

Seems like they are listening at last.

 

It should also be One Licence - One Trading name and not the multiple trading names using the same licence....

 

I am contacting them today about the MMF problem I am having, checked my records and this loan was repaid back in 2008 (but I am not doing MMF's dirty work for them - they were meant to have checked the info before they allegedly purchased this non-debt).

[citizenB]

http://www.moneyadvicetrust.org/content.asp?ssid=184

[toptrapper]

Disappointed in that no names have been released.

 

12 weeks to get their houses in order. Now, call me cynical, but i can see a split between some PDL's who'll attempt to get sort out forebearance, complaints handling etc and some that'll continue regardless, take the £££, hand their credit licence and hop off with their cash after.

 

OFT want to improve publication of APR and promote better quality/standard of PDL advertising. APR's have always been a misnomer with PDL's, as the OFT suggest, 1/3rd of loans are rolled over at least once, and these extended loans accounted for almost half lenders' revenues. This is where focus should be, suggesting that better communication of the APR iis pointless. Also, nearly 20% of revenue came from the 5% of loans rolled over four times or more? FFS. How much more information do they need? It's when things go wrong - the loan cannot be repaid on time and charges are added - THIS where the problem lies.

 

Anyway, I'm now away for a lie down.

Edited March 6, 2013 by toptrapper

[renegadeimp]

Oft is also being shut down and replaced by an agency with more power.

[toptrapper]

Rene - you sure?

I though the FSA is being replaced by Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) who have different agendas?

[steven4064]

I got this e-mail from Stella Creasy suggesting we write to th Acting Chief Operating Officer Lesley Titcombe at the Financial Services Authority to ask her to act urgently. I have e-mailed Lesley Titcombe, perhaps we all can.

 

OFT says Payday Loan industry out of control but Government still opposes caps: Help fight Britain's legal loan sharks by writing to the FCA today!

 

 

Today the Office of Fair Trading reveals legal loan sharks are out of control in Britain- despite this the Government has again spoken out against capping the costs of credit. This is the measure that has been shown in other countries to prevent the problems with debt that too many users of these loans experience. This email tells you how you can help us challenge the Government's failure to act and call on the Financial Conduct Authority to introduce a cap on the cost of credit as a matter of urgency.

 

The Office of Fair Trading is damning - it shows the problems with legal loan sharks come not from 'a few rogue' companies as the Government claims but an entire industry which is exploiting British consumers. Their evidence shows how the cost of credit itself pushes people into debt, with 50% of profits coming from people rolling over loans month after month. The OFT is so fed up with the damage these companies do that they have decided to refer the entire industry to the Competition Commission.

 

Thanks to your efforts last year to change the law, the new Financial Conduct Authority will have the power to cap the charges these firms can levy, to stop people getting into debt with them in the first place. Yet today the Government has argued against using this power. Please help us send a message on behalf of all those struggling to pay the costs of these loans that this is wrong and that any delay in tackling the cost of credit in the UK is likely to lead to further financial difficulties for hard pressed Britons.

 

Today, the Financial Services Authority have launched a consultation paper on the functions and powers of the FCA. Below is a suggested email to send to the Acting Chief Operating Officer Lesley Titcomb to ask her to urgently act - the consultation email address for these messages is [email protected] so please send her an email today!

 

As energy bills and travel costs continue to rise, it is vital we do not let this Government stand in the way of giving British consumers the same protection from these debts that others around the world expeirence. To make sure your MP is aware of your concerns, please also copy them into this correspondence- You can find contact details for your MP here.

Its clear from today that this Government cannot be trusted to protect British consumers against this well funded industry- it's therefore up to us to speak up for the protection British consumers deserve!

 

 

Stella Creasy

Labour and Co-operative MP for Walthamstow on behalf of #sharkstoppers

p.s.

please share this email to a friend to encourage them to help our campaign and do follow @sharkstoppers on twitter for further updates!

----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Text to use to write to Lesley Titcombe

I’m writing to you as a resident of the UK to ask you to listen to the case for providing British consumers with the protection from toxic credit other consumers around the world enjoy by capping the costs of credit.

 

I was delighted that last year Parliament approved, in principle, powers for the new Financial Conduct Authority to cap the costs of credit- and deeply disappointed to hear the Government speak out against this measure this year. Millions are already struggling financially due to the rising cost of living, unemployment or wage freezes. Without action to ensure the cost of credit is affordable, we could see millions more Britons getting into financial difficulies as a result of borrowing from these legal loan sharks.

 

The Office of Fair Trading report shows just how out of control these firms are and the need for the Competition Commission to investigate this whole industry. Actions on credit checking and advertising rules will help to limit this damage, but the best way to prevent these problems is to introduce caps on the total costs of credit so that families are not pushed into debt when borrowing in this way in the first place. To help understand how best to tackle these problems I urge you to commit to undertaking your own urgent research into total cost caps and how they work in other nations such as Japan, America and Australia and pledge to take action as soon as your role supervising consumer credit comes into force in April 2014.

 

I would welcome confirmation from you that you will support these measures and I have copied my MP into this email so that they are aware of my concerns.

 

Yours Sincerely,”

[renegadeimp]

I was reading BBC news earlier and they said the OFT is being replaced. It's now been edited. However, at least the government has finally admitted something needs to be done. Which came as quite a shock given who one of the Condemns biggest donators is.

 

It;s just a shame that the FCA doesnt have any power till April 2014. Until then its the half arsed OFT and their petty attempts to "regulate" the industry.

[citizenB]

It would be nice if caggers could get behind this campaign - Stella Creasey who has been at the forefront in the fight against the Pay Day Loan companies has yet again, drafted a letter for people to use. See post # 9.

 

Send to Lesley Titcombe at the FSA and copy in your MP.

[citizenB]

http://www.credittoday.co.uk/article/14916/online-news/oft-tells-50-payday-lenders-get-your-house-in-order

 

 

http://www.credittoday.co.uk/article/14920/online-news/credit-summit-oft-to-reveal-more-on-payday-report

 

 

http://www.credittoday.co.uk/article/14922/online-news/payday-lending-complaints-to-fos-on-the-rise

[citizenB]

Payday loan rolled over 36 times

 

 

A payday lender rolled over a customer’s loan 36 times before it considered

the individual for a hardship plan.

 

The customer was subjected to debt collection attempts while the loan was

repeatedly rolled over – adding interest to the original debt each time –

before the firm debated placing the customer in a hardship scheme.

 

 

 

 

 

In a separate case, the OFT was told by staff at

two high-street payday lenders that encouraging rollovers was a deliberate

commercial strategy and regarded as a key “profit driver” for the

firms.

 

 

The OFT has chosen not to name individual lenders,

but has warned the industry it has 12 weeks to clean up its act.

[toptrapper]

http://www.credittoday.co.uk/article/14932/online-news/wonga-responds-to-ofts-payday-report

 

Wonga have issued a statement which includes the bizarre claim of "In particular it has highlighted the gulf that exists between our business practices and some of the other lenders in the short-term credit sector.” I know that Wonga aren't the worst PDL, but claiming (rightly or wrongly) to be the best in this sector is hardly something to be proud of?

 

They also claim "that a wider review of short-term credit to include bank overdrafts and credit cards would have been better for the consumer". Nice try to deflect attention away from your own inadequacies. Take the plank out of your own eye before the splinter from someonelses, you'll be able to see better.

[andydd]

Anyone see the CEO of Friday Friday (a so-called 'ethical loan company') make a complete prat of himself on Newsnight up against Stella ?

 

It was very funny especially when he continually claimed his website did not promise 'no credit checks', even when told my Newsnight staff they'd just checked it and indeed it did...........http://www.fridayfriday.com/Home.aspx, they have now changed it !, but of course plenty of people took screen grabs or used Google Cache.

 

Their Twitter page > https://twitter.com/fridayfriday_ is full of apologies and backtracking.

 

Andy

[sillygirl1]

I saw him on the BBC this morning, and called him a few uncomplimentary names.

 

He tried to say it was an 'oversight' and that it had now been removed.... how many of these 'website teams' are making 'errors' that should have been picked up on before the site went live - haven't they heard of properly proof reading something?

 

I wonder how many of these 'oversights' litter their website and their Terms and Conditions!

 

He didn't look old enough to have much experience in life and be somebody who needed funds in a hurry either.

[andydd]

http://www.credittoday.co.uk/article/14932/online-news/wonga-responds-to-ofts-payday-report

 

Wonga have issued a statement which includes the bizarre claim of "In particular it has highlighted the gulf that exists between our business practices and some of the other lenders in the short-term credit sector.” I know that Wonga aren't the worst PDL, but claiming (rightly or wrongly) to be the best in this sector is hardly something to be proud of?

 

They also claim "that a wider review of short-term credit to include bank overdrafts and credit cards would have been better for the consumer". Nice try to deflect attention away from your own inadequacies. Take the plank out of your own eye before the splinter from someonelses, you'll be able to see better.

 

So are Wonga admitting they are one of the 50 companies ?, the report does not differentiate between good or bad it just lists the findings, i dont believe it in anyway claims that some were better or worse than others.

[sillygirl1]

Seeing as Wonga have already been slapped by the regulators I suspect that this is their way of trying to make amends.

 

I wouldn't mind betting that the OFT did not want to name people YET as they would have a whole flood of complaints to deal with, and sorting out the wheat from the chaff would only add to their inadequate service.

 

I still maintain one licence per trading name and abolish group licences altogether should be the way forward.

 

How can a business who lends money on one hand and then tries to collect not only its own but other smaller players debts be able to keep both separate? A bit like trying to run a car without oil or petrol together!

[renegadeimp]

Ive always said rollovers were a pure business strategy levied on vulnerable people purely to make a profit.

 

Especially when they levy more interest and continue debt collection practices against them.

[determindator]

Ive always said rollovers were a pure business strategy levied on vulnerable people purely to make a profit.

 

Especially when they levy more interest and continue debt collection practices against them.

 

Exactly, no place in society.

[andydd]

Friday Friday replied to my FB post, its all the fault of the website designers !...I asked that in that case are they going to sue them ?

 

Andy

[citizenB]

I have moved some off topic posts to their own thread.. I will come back with the link in a moment.

 

 

http://www.consumeractiongroup.co.uk/forum/showthread.php?387019-Bill-of-Exchange-v-Law-of-Property-Act.

 

 

The posts that have been moved to the thread linked above had absolutely nothing to do with the subject of 50 Pay Day Lenders facing a ban.