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More Payday Lenders Drop Out

Written By On 17/08/2013

As we told you in previous articles on this website, the Office of Fair Trading have referred the payday loan industry to the Competition Commission.

Back in March, the OFT gave fifty payday lenders three months to put their affairs in order and get back to them, but some have opted to close. Earlier this week a further four of them have joined the group totalling a staggering nineteen from the original fifty no longer in the payday lending category.

On top of that, the OFT have revoked the licences from a further three short term lending companies, plus three more have capitulated their licences.

This report may be well received by certain politicians and Justin Welby, the Archbishop of Canterbury who have been on a mission to head hunt and regulate the sector. However others may disagree, as a recent survey by uSwitch suggested that around fifty per cent of people that were approved for payday loans had a very positive experience.

In general there seems little doubt that most would like to see the payday loan sector more regulated as short term loans carry on increasing year on year. But also, many would admit that this type of loan has been needed to be introduced because banks and other financial firms have made it far too difficult for the everyday person to acquire a small loan in their time of need.

The main issue that is being looked into is that lenders are in such a hurry to 'seal the deal', the correct, or even enough checks are being taken out on the prospective borrower which therefore leads to problems in repaying and 'roll overs' being required.

The Competition Commission has given until the 20th September for anyone to air their view to them on whether or not everything has been addressed correctly.