Four payday lenders reported to OFT for deceitful business practices
Citizens Advice is today calling on the Office of Fair Trading (OFT) to use its new powers to immediately suspend the licences of four payday lenders to stop the firms operating.
A dossier of evidence from across the Citizens Advice service has been provided to the OFT revealing the firms to be acting unfairly, exacerbating debt problems and causing significant distress.
Problems uncovered by Citizens Advice include:
- firms levying inflated fees and charges;
- continuing to take money when debts have been paid off;
- obstructing customers from making repayments online or over the phone then charging late fees;
- harassment by repeated telephone calls, text messages and emails to repay debts;
- chasing people for debts on loans when the individual didn’t apply for a loan in the first place;
- aggressive and abusive staff.
Citizens Advice has also reported three debt collection companies to the OFT asking for their licences to be suspended.
From Tuesday 19 February 2013 the OFT will have power to immediately suspend the consumer credit licence of companies if it is urgently necessary to protect consumers, for example, because the firms are using business practices which aredeceitful, oppressive or unfair.
Up until now if the OFT wanted to revoke a firm’s consumer credit licence it could continue operating while any appeal process was ongoing. This could take years and in the meantime left thousands of people exposed to the firms’ underhand practices.
Citizens Advice Chief Executive Gillian Guy said:
"The OFT must take immediate action to investigate and suspend these companies. These firms pose a real risk to people looking to get a short term loan to help tide them over.
"Our evidence shows these lenders are behaving as a law unto themselves. Excessive fees and charges are escalating debts and people are worried sick as companies bombard them with texts, emails and phone calls often overstating their debt collection powers.
"With a ten-fold increase in people struggling with payday loans we are keeping a very close eye on the industry and will be reporting any other lenders to the OFT found to be using deceitful tactics."
Citizens Advice is gathering evidence of other lenders who are also found to be contravening the OFT guidance. It is also running a year long study asking payday loan customers to share their experiences of using a payday lender to check whether the industry is complying with its customer charter launched last year.
Notes to editors
- Section 32A of the Consumer Credit Act specifies that the OFT may suspend a consumer credit licence with immediate effect if it appears to be urgently necessary for the protection of consumer
- Citizens Advice has reported five consumer credit licence holders to the OFT. Each licence holder uses a number of trading names, the suspension of the licences would stop the business activities of all of the trading arms under each licence.
- The Citizens Advice service comprises a network of local bureaux, all of which are independent charities, and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more information in England and Wales see www.citizensadvice.org.uk
- The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality. For online advice and information see www.adviceguide.org.uk
- Citizens Advice Bureaux in England and Wales advised 2.1 million clients on 6.9 million problems from April 2011 to March 2012. For full 2011/2012 service statistics see: www.citizensadvice.org.uk/press_statistics
- Out of 22 national charities, the Citizens Advice service is ranked by the general public as being the most helpful, approachable, professional, informative, effective / cost effective, reputable and accountable (nfpSynergy’s Brand Attributes survey, May 2010).
- Most Citizens Advice service staff are trained volunteers, working at around 3,500 service outlets across England and Wales.