The Office of Fair Trading (OFT) this month had warned 50 loan firms that they had to clean up their acts before 12 weeks of receiving notices or face losing their licences. It was supposed to be steps towards ‘a top enforcement priority’.
But it seems the proposed clampdown on payday loan companies was going to be delayed by months after it was found that some of the firms were still not served with formal warnings of their offences.
According to Financial Mail, even after four weeks after the announcement several firms were not served with letters detailing where they had breached the law and the remedial action required. The 12 week notice period commences from the day the letter is received.
The OFT is expected to take another two weeks to contact firms meaning the deadline was going to stretch beyond the end of May.
The watchdog said it had decided to manage the volume of cases by staggering communications with firms. And by doing so it hoped to deal with the response better by giving time to review and possibly action, which could take the process into late summer.
But the delay was criticised by campaigners who were hoping the ‘legal loan sharks’ would be brought swiftly in line with the law.
Damon Gibbons, chief executive of the Centre for Responsible Credit, said one could not put their faith in the OFT to sort out the loan industry in a reasonable time scale. Many of these firms were found to be breaking law and there was a need for taking immediate action.
The OFT visited firms but it is believed some wrote crucial debt collection policies only days before the meeting.
Mr Gibbons said that the government should consider hastening the transfer of the responsibility of the payday industry to the Financial Conduct Authority to deal with the firms at the earliest.