Friday 31 May 2013 UK
Payday loan regulator ‘lacks power’ to tackle predators
The Office of Fair Trading admits it “lacks regulatory powers” as it is slammed by MPs for failing to protect consumers from “predatory” lenders.
OFT hits back at PAC criticism over payday loans (Image: Getty)
A damning report by a powerful committee of MPs said the OFT had been “ineffective and timid in the extreme” in tackling the “shabby end” of the credit market, which is costing borrowers £450m a year.
The public accounts committee (PAC) criticised the OFT for not taking tougher action.
But the OFT hit back, claiming it was taking “strong, targeted action” in the areas of greatest risk to consumers but is held back by law.
An OFT spokesman said: “We are disappointed that the committee has not acknowledged the constraints of the legislation under which the OFT currently operates which… was not designed to provide a supervisory approach to addressing potential consumer harm.
“As the National Audit Office recognised, these constraints include a lack of regulatory powers and the ability to impose fines only in very limited circumstances.”
In March the OFT began rolling out regulation requirements to 50 payday lenders, giving them a 12-week deadline to prove their good behaviour or risk losing their licences to trade, which the MPs said was an “encouraging” step. http://www.channel4.com/news/payday-loan-regulator-lacks-power-to-tackle-predators