Charity calls for action on 'deceitful' loan firms

 

Citizens Advice has reported four payday lenders to the Office of Fair Trading for "acting unfairly, exacerbating debt problems and causing significant distress" to borrowers.

The charity accused the lenders – which it has not named – of having inflated fees and charges; taking money even when debts have been paid off; obstructing customers from making repayments and then charging late fees.

It also said it had evidence of harassment by aggressive and abusive staff and lenders chasing people for repayment of loans they had never taken out.

Gillian Guy, the chief executive of Citizens Advice, said: "The OFT must take immediate action to investigate and suspend these companies. These firms pose a real risk to people looking to get a short-term loan to help tide them over. Our evidence shows these lenders are behaving as a law unto themselves. Excessive fees and charges are escalating debts and people are worried sick."

From next Tuesday the OFT will have the power to immediately suspend the consumer credit licence of companies if it is urgently necessary to protect consumers, for example because the companies are using business practices which are deceitful, oppressive or unfair.

The consumer watchdog pointed out that "the new power to suspend can only be used in the most serious cases of immediate harm". The OFT is set to recommend a major clampdown on the payday loan sector this month.

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