Fourteen payday lenders ordered to prove they have changed their practice by the Office of Fair Trading have opted to leave the market, as reported in Inside Housing today
It follows a year-long review of the industry, which led the OFT to write to 50 leading lenders, accounting for 90 per cent of the market, giving them 12 weeks to set out how they would get back in line with the law.
Just under a third of these firms have replied saying they will leave the payday loans market, with three surrendering their credit licences completely.
The other 11 continue to lend in other ways and will submit an audit report to OFT.
The OFT has not named the 14 firms concerned.
Another two firms, outside the 50 leading lenders, have also surrendered their licences.
StepChange Debt charity’s head of policy Peter Tutton said: ‘The problems that exist within the payday lending industry and the dangers posed to consumers are now well established. Despite this, the number of people we help with payday loans looks set to almost double this year, while problems such as multiple borrowing and inadequate affordability checking by lenders continue to grow.
‘The OFT’s action including its compliance review and referral to the Competition Commission have both been welcome. However, the OFT should now issue a detailed progress report on how it plans to address the continued consumer detriment caused by payday loans.’
The OFT’s extensive review of the payday lending sector was prompted in part by concerns that some payday lenders are taking advantage of people in financial difficulty.
The review investigated 50 leading companies to assess levels of compliance with the Consumer Credit Act and revealed widespread problems when it was published in November last year.