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Payday Summit Meeting Due

Written By On 26/06/2013

The payday loan industry's watchdog are due to decide tomorrow whether or not to refer the £2 billion industry to the Competition Commission. It is widely anticipated that the Office of Fair Trading will choose referral and in light of this, a government summit meeting has been arranged for Monday 1st July.

Government consumer minister Jo Swinson will attend along with representatives from the payday loan sector and regulators.

Delroy Corinaldi, director of Step Change, intends to represent his debt charity along with others at the summit as he feels there are many issues that need to be addressed immediately. His company recorded that their customers who had payday loan debt that were based in the South East had a typical amount of £563 that increased by at least threefold in the twelve months up to 2012.

These type of short term loans continue to come under fire from politicians including Labour MP Stella Creasy. She has been particularly vocal and feels that the consumer minister needs to crack down hard on the industry to force the changes that she thinks is needed.

Citizens Advice say that they investigated that almost nine out of ten candidates that applied for a loan, have been offered one without them needing to produce enough evidence that they will be able to repay it. This is why some companies that have complied have added some extra questions to the application process.

In March earlier this year, the OFT gave the top fifty payday loan lenders an ultimatum: to get their act together within twelve weeks or risk having their credit licences revoked, which will automatically put them out of business. Two companies have lost their licences thus far with another lender announcing that they will be leaving the market.

Martin Wheatley, Chief Executive at the Financial Conduct Authority will be expected to attend Monday's meeting. The FCA will be taking over the baton from the OFT in April next year to become the regulators for the payday loan market in the UK. Mr Wheatley has already asked for new practices to be initiated.

Russell Hamblin-Boone, Chief Executive of the Consumer Finance Association, looks forward to the summit and says he welcomes the opportunity for some honest dialogue.