Recently the payday loan industry was referred to the competition commission by the Office of Fair Trading. The £2bn a year industry has been dogged by criticism and complaints in 2013 culminating in the referral and a summit of lenders, charities, regulators and ministers.
In case you missed it, the criticism centres around the interest rate some payday lenders loan monies at and then steps some take to apply pressure to the borrower to recover sums owed. Often those applying for payday loans are vulnerable people with no means of repayment and so any debt problem they face is heightened by what ought to have been part of a short term solution.
Concern about the industry has been raised before and in 2012 payday loan organisations signed up to a letter of intent of a code of practice that now appears to be bring ignored.
There are claims that a process called ‘Continuous Payment Authority’ is being used by the lenders to access borrower’s bank accounts ‘inappropriately and excessively’ to recover instalment payments. It seems these practices are now under review.
My view is the products themselves are unattractive to most of the applicants but it is a decision for each applicant as to whether that product is for him or her. It is not being said the terms upon which the loan is made are hidden of missold but if continuous payment authority is being misused then there must be action following the summit to prevent the problem spreading further.
EHL will monitor the progress following the summit and provide an analysis of its outcome and effect.
Paul is our Managing Director in Leicester. All of our staff in Leicester are experts in their fields and dedicated to quality client care. If you would like to find out more about our solicitors in Leicester please contact us.
Keep up to date with our daily blogs through the Edward Hands & Lewis mobile app, just search Edward Hands on the iPhone or Android store to download our app for free.Talk to our legal team
The information provided in all of our blogs reflects only a narrative of some elements to consider on the topic. The blogs do not contain considered legal advice and should not be relied upon as advice. Please see our website terms and conditions for full details of our disclaimer. If you are interested in obtaining advice, please contact one of our lawyers who will be happy and able to advise you on your own particular circumstances.