MPs say cash loans industry may be poorly regulated, opaque

MPs have recently stated that the cash loans industry may require swift governmental action due to its poorly regulated and opaque nature, payday advance experts have remarked.

The Commons’ Business Committee says that there should be limits placed on the number of times a borrower is permitted to roll over their short term loans, as concerns have been raised about spiraling debts caused by the popular source of credit.  MPs also said that the regulator is in need of a way to suspend the licences of credit companies in a swift manner if there is proven foul play, as the tough economic times may be leaving too many vulnerable people at risk, and should also have the authority to ban products it deems too harmful in drawing customers into unfair levels of debt.

MPs also raised concerns about payday advance lenders allowing their loans to be rolled over month after month, leading to ballooning debt that quickly becomes quite unmanageable.  The Office of Fair Trading is currently conducting an investigation into the industry, trying to weed out disreputable lenders that are giving the honest ones within the industry a bad reputation.

The committee also wanted debt management companies, firms that charge customers for advice on managing their debt, to eliminate upfront fees.  Adrian Bailey, the chairman of the committee, said that many more vulnerable Brits have come to rely on the services provided by consumer debt management companies in order to make ends meet, yet the industry remains both poorly regulated and opaque, and that abuse of a rapidly-growing vulnerable customer base must be curtailed immediately.

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