Payday advance lenders found to be flouting European consumer rules will be shuttered, according to EU statements.
Investigations into the instant short term loans industry discovered that a full 80 per cent of lenders operating in the UK have neglected to provide required basic information such as borrowing costs. The EU inquiry examined firms providing instant cash loans and credit cards.
Steve Perry, an independent investigator of payday lenders, says that he has also found several lenders that have neglected to comply with many legal requirements. Mr Perry has made discoveries such as lenders trading without a consumer credit licence, which prompted him to report the incident to the Office of Fair Trading.
Independent investigations have not been able to verify Mr Perry’s accusations through contacting payday lenders in order to check their authorizations or credentials. Regardless of this fact, the payday lender detractor has called the industry ‘an absolute minefield’ of bad practice and deceit, warning people away from taking out instant cash loans from payday lenders.
European finance authorities have a deadline of this autumn to investigate the alleged sites that have been violating EU consumer credit directives. Legitimate lenders have welcomed the investigation, as rogue firms have a deleterious effect on the reputations of those operating on the up-and-up, with one payday lending expert remarking that lenders who neglect to include information on the cost of their loans and when they need to be repaid are operating in an irresponsible manner.
Despite the industry expert’s statements, many borrowers have reported difficulties in finding lenders who list borrowing details in a clear and concise manner. Payday advance lender authorities say that you should only borrow from lenders that provide these details properly.