A UK Parliamentary committee blasted the Office of Fair Trading -- a consumer watchdog agency that is supposed to regulate moneylenders -- for doing effectively nothing to curb the growth of usurious, predatory moneylenders who attack poor and vulnerable people. There are 72,000 consumer credit firms in the UK, some chargin annual interest rates of 4,000%, but the OFT has never fined a single firm for breaking lending rules. On some rare occasions, it did shut down firms, but did nothing to stop them from reopening immediately under another name.
This week the charity Citizens Advice said it knew of cases where loans had been given to under-18s, to people with mental health issues, and to people who were drunk at the time of securing the loan. One client who took out a £50 loan was targeted with emails and texts offering more cash and ended up with debts of £800.
"Some of these lenders use predatory techniques to target vulnerable people on low incomes, encouraging them to take out loans which when rolled over with extra interest rapidly become out of control debts," the committee's chair, Margaret Hodge, said. "Meanwhile, the OFT has been ineffective and timid in the extreme. It passively waits for complaints from consumers before acting."
PAC's report said the OFT lacked information on how much lending was being done by each firm, and about how different people used consumer credit. A study commissioned from the National Audit Office suggested the scale of consumer harm was at least £450m a year, but the OFT was accused of lacking detailed information on the types of harm suffered by different groups of borrowers.
OFT criticised over 'ineffectual' payday loans policing [Hilary Osborne/The Guardian]
(Image: La Danse macabre, Guy Marchant/Wikimedia Commons)