Press release 20/11/2012
Responding to the OFT report published today which shows yet again payday lenders are refusing to abide by their own codes of conduct, Stella Creasy MP said;
“ This report is damning both of this industry and the approach the government has taken to the needs of British consumers It shows the OFT doesn’t have the powers to make these companies even follow the most basic of good consumer practises and it’s our constituents who are suffering as a result.
The OFT try to suggest these concerns are ‘emerging’ but in truth we have been trying to warn the Government and the regulators about the damage these companies are doing to British consumers for years. Every year the same voluntary code of conduct has been announced and yet today’s report just shows how lenders aren’t even following their own guidelines; however they try to claim otherwise.
We know now 5 million Brits are looking to the this toxic form of credit to make ends meet in the coming months- self regulation of this industry has clearly failed and its time the Government stopped ignoring these problems and introduced caps to protect British consumers as they do in other countries from the debts this type of lending can cause. Another announcement of the same code simply won’t wash with hard pressed families facing financial destitution this Christmas as a result of these companies and the Government should have the decency to respond urgently to their needs, rather than continuing to put these legal loan sharks first.”
Today’s interim report by the OFT is yet just another in a long line of investigations to report about the payday loan industry. Below you can find details of each of the reviews and reports that have been commissioned and published over the past 3 years.
- The OFT progress report into payday lending can be found here at the OFT website.
- The OFT launched its review into the payday lending sector in February 2012.
- Half (48%) of payday loan users have taken out credit that it turned out they couldn’t afford to repay.
- A third (29%) of payday loan users have taken out credit that they knew they couldn’t repay.
- In the last 12 months, more than half (57%) of people with payday loans have missed a payment and have incurred charges because of missed or bounced repayments (56%).
- Research by R3, the insolvency practitioner shows that more than 5 million (5,205,237) GB adults say they are considering taking a payday loan in the next six months. This equates to approximately a 50% increase since this time last year, when it was around 3.5 million individuals.
- In the past six months, 13% of the GB population have prioritised paying back these loans over traditional ‘essentials’, such as buying food, clothes or paying for gas and electricity. Specifically 7% have prioritised paying back these loans over buying food in the past six months.
- Stella Creasy MP has been campaigning for caps on the cost of credit since 2010. You can find more details on her campaign here.
For more details on the campaign to tackle legal loan sharking in the UK visit Stella Creasy MP’s website www.workingforwalthamstow.org.uk ; or call 020 8521 1223.
Payday Lending Regulation Review Timeline 2008-2012
CFA respond to OFT consultation on introducing a responsible lending guide suggesting the introduction of an irresponsible lending guide would increase costs of payday loans
Trade associations, including CFA, launch ‘Good Practice Customer Charter’ to be implemented by November 26th 2012 with review for Summer 2013 (5 years after the first 2008 report from OFT)