Government invests OFT with broader regulatory powers

The Office of Fair Trading will soon have the ability to suspend consumer credit licences immediately, thanks to new powers the Government has given the watchdog agency.

The change comes none too soon, as consumer groups have been enraged to learn that consumer credit providers such as payday loan companies are permitted to continue trading even after being officially censured for breaching regulations. One of the most egregious examples of this was payday advance provider Yes Loans, with the lender facing censure for charging prospective customers as much as £70 for a loan that was then never delivered.

The OFT’s new powers will enable it to clamp down on disreputable lenders such as providers of no credit check payday loans that bear exorbitant rates of interest. Lenders have until early 2013 to prepare for the change, which will allow the watchdog to act swiftly in instance where consumers are in urgent need of protection from predatory payday advance lenders.
Financial Secretary to the Treasury Mark Hoban and Consumer Affairs Minister Norman Lamb announced the new move in direct response to criticism regarding how these predatory lenders are permitted to continue to operate while they appeal the OFT’s decision to revoke a credit licence. With the appeals process a long, drawn out one that can sometimes last as long as two years, the potential for continued damage done to the nation’s lower income earners was all too real, prompting both government officials to announce the incoming policy change.

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