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Some Lenders Leave the Market

Written By On 10/07/2013

The Office of Fair Trading are now apparently still waiting for another twenty two short term loan lenders to come back to them regarding the requirements that need to be met.

The OFT who are the current watchdog for payday loans contacted the biggest fifty lenders in March earlier in the year giving them twelve weeks to meet the demands that the regulator gave them.

Out of the other twenty eight that did reply, two have decided to stop lending with another eight being reported to have told them that they will not be proceeding with payday loans.

Two of the twenty two remaining companies did not reply by their due date whilst the rest should respond by the 31st July.

According to the OFT, they also reported that a former examination of the payday loan industry was the reason that in excess of one hundred loan providers were either not able to receive a consumer credit licence, or decided to withdraw from the market.

They say that some lenders did not go through a responsible lending process. They were in too much of a hurry to offer the loan in order to present their customers with exorbitant interest charges in some instances of over five thousand per cent. This was one of the major reasons why they decided to refer the £2 billion trade to the Competition Commission.

Martin Wheatley, Chief Executive at the Financial Conduct Authority, attended a summit meeting hosted by government consumer minister Jo Swinson on the first day of July. The FCA will be handed over the payday regulating job from the OFT in April 2014 and he has made it clear that the they will be taking a much firmer attitude against companies that fail to abide by the rules.