The Office of Fair Trading has told the 50 largest payday loan companies to clean up their act within 12 weeks or risk losing their licence to trade.
The OFT uncovered evidence of widespread irresponsible lending and failure to comply with the standards required of them.
Particular areas of non-compliance included:
• lenders failing to conduct adequate assessments of affordability before lending or before rolling over loans
• failing to explain adequately how payments will be collected
• using aggressive debt collection practices
• not treating borrowers in financial difficulty with forbearance.
Firms must demonstrate within 12 weeks that they are fully compliant, or risk losing their licence. Failure to cooperate with this process will trigger enforcement action.
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