The investigation of the instant cash loan industry by the Office of Fair Trading is now officially underway, with the watchdog looking into allegations of predatory lending practices, experts say.
Many payday advance sector critics have raised concerns that providers of no credit check short term loans have been targeting vulnerable classes of Brits, such as those dependent on benefits or who are currently looking for jobs. The OFT will examine these claims, looking for evidence of irresponsible behaviour such as agreeing loans without carrying out suitable financial checks.
A total of 50 lenders are being investigated by the new OFT initiative, though the names of the lenders have not been made known to the public. Industry experts report that any found to be lending in an irresponsible manner could face the loss of their licence.
Lenders will have to face tough questions regarding whether or not their borrowers who experience difficulties meeting repayments are dealt with in a fair manner. The watchdog will also address the issue of ‘rolling over’ payday advances as well, with the director of consumer credit for the OFT, David Fisher, stating that it was concerned that there could be some lenders capitalising on the financial difficulties of Brits in need.
The new investigation comes on the heels of many calls from payday lending detractors, such as Labour MP Stella Creasy. Ms Creasy has campaigned ceaselessly for inquiries to be made into the industry’s practices, hoping to push through stronger legislative measures to weaken and limit the scope of instant cash loan companies.
Payday lending experts disagree, though they welcomed the OFT investigation in order to weed out disreputable lenders that give the honest ones a bad name.