Legal News

According to the Citizens Advice a debt advice charity there emerged fresh evidence that ‘out of control’ payday lenders were loaning money to people who were under the legal age of 18 and who had mental health issues.

The charity says that it had seen all such cases in recent months and the findings had come at a time when Britain’s biggest payday lenders were under threat of closure if they were unable to prove to the Office of Fair Trading (OFT) that they were conducting business in the right manner.

By June the OFT is expected to announce whether it would refer the payday market for an investigation by the Competition Commission.
Citizens Advice said the OFT must take 'tough and immediate action' after the trading watchdog handed 50 payday lenders a 12-week deadline in early March to prove their good behaviour or risk losing their licences, which they need in order to trade.
In a barrage of notices to the lenders OFT told them that they were needed to step up and the responses would be analysed before it decided what to do next.
The Citizens Advice analysis came from 780 cases reported to it between November 2012 and May this year. It also found that people were being chased for loans they had never taken out and customers were being hounded at their home to shame them into paying up.
The bank accounts of struggling borrowers were being drained of cash without any warning by lenders using a type of payment agreement called a continuous payment authority the charity said.
The charity had also found evidence in some cases lenders had taken more than they were owed and refused to give a refund.
Nine out of 10 cases from the customer feedback out of 2000 payday loans had shown that borrowers were not asked to hand over documents to show they could afford the loan. Three quarters said they struggled to repay the loan and 84 per cent who had repayment problems were not offered the chance to have their interests and charges frozen.
Citizens Advice chief executive Gillian Guy described the payday loan industry as 'out of control' and said it has shown a 'complete disregard' for customers. She urged the OFT to take swift action to protect consumers.
The OFT's own probe into the industry uncovered evidence of 'widespread irresponsible lending' and it found that lenders appeared heavily reliant on struggling customers who were not in a position to pay their loans back on time.
The OFT said it has received confirmation from 48 out of 50 lenders that they intend to prove to the regulator that they are acting within the rules.