'Toxic' loans industry scrutinised at summit
Sunday 30 June 2013
Payday lenders, regulators, charities and government ministers will be brought together on Monday to tackle the problems in the loan industry.
Jo Swinson, the minister responsible for consumer affairs, will host the summit, which comes just days after the sector was referred for an investigation.
The Office of Fair Trading (OFT) referred the £2bn industry to the Competition Commission last Thursday, saying it fears that consumers who cannot afford to pay their loans back on time are finding themselves trapped with one firm when their loans are rolled over.
It is also worried that payday loan firms are emphasising the speed of the loan over cost and that lenders may be “skimping” on affordability checks.
Up to half of lenders’ revenues were found by the OFT to come from the extra charges and interest coming from loans being rolled over. The Commission’s investigation will take up to 18 months and it has powers to ban or limit products.
The payday sector has come under heavy criticism from debt charities, which have accused lenders of being “out of control”.
Ahead of the summit, Richard Lloyd, executive director of Which?, said the consumer group wanted to see more action from Government to tackle the “toxic market”. He said: “We want new rules banning excessive charges, a restriction on the number of times a payday loan can roll over and clearer advertising.”
Payday lenders argue that they have worked to clean up their act, including the introduction of a new code of practice last year to ensure loans are affordable.
- 1 Snoop Dogg and Jared Leto buy a stake in Reddit as A-list invests $50m
- 2 Prince held a Facebook Q&A and this is the only question he answered
- 4 Now we know whose fault it is if you end up being murdered in Thailand
- 5 35,000 walrus gather ashore on north-west Alaska beach 'for a rest'
Exclusive: 'Putin's Russia has been my biggest regret,' says Nato's outgoing Secretary General
The Osborne Ultimatum: Chancellor’s benefits freeze bombshell will affect ten million households
There’s no excuse for Dave Lee Travis’s behaviour, but we need to keep a sense of proportion
Should gay sex be illegal? 16% of Britons think so
Mark Reckless becomes second Tory MP to defect to Ukip in a month
Benefits 'smart cards' plan revealed by Iain Duncan Smith to stop claimants spending welfare money on alcohol
- < Previous
- Next >
£18000 - £23000 per annum + Uncapped OTE: SThree: SThree Group have been well ...
£18000 - £23000 per annum + OTE: SThree: Real Staffing Group is seeking Traine...
£120 - £140 per day: Randstad Education Leeds: We have an exciting opportunity...
Competitive: Randstad Education Manchester: SEN Teacher urgently required for ...