Payday lenders probe findings due



Initial findings from an in-depth investigation into payday lenders by the Competition Commission are to be published late next spring.

The sector was referred to the Commission after the Office of Fair Trading (OFT) found "deep-rooted" problems, including customers becoming trapped by lenders rolling over loans which they cannot afford to pay back.

Setting out the timetable for its investigation on its website, the Commission said it will give its provisional findings and any possible remedies around May or June next year.

It will publish a full report into the industry, which has come under intense criticism in recent months, around November or December 2014. The Commission has strong powers to ban or limit products and shake up whole markets and can free up competition by either taking direct action itself or recommending measures by other bodies.

It has previously intervened to get to the heart of problems like the payment protection insurance (PPI) mis-selling scandal. The Commission previously recommended severe restrictions on the sale of PPI policies, including stopping lenders from selling the insurance at the same time as granting a loan.

New regulator the Financial Conduct Authority (FCA), which has powers to step in quickly and stamp out problems, will oversee payday lenders from next April.

Its powers would enable it to place a possible cap on interest rates and limit or ban the number of rollovers lenders can offer, if it sees fit.

The debate into the payday loans industry took a new twist recently when it emerged that the Archbishop of Canterbury had told Wonga that the Church of England wanted to " compete'' it out of existence as part of its plans to expand credit unions as an alternative to payday lenders.

Fifteen out of 50 lenders which were given a deadline by the OFT to prove their business practices were up to scratch have since said they do not plan to continue operating in the payday sector.

Earlier this week, Citizens Advice launched a month-long campaign urging people who feel they have been mistreated by a "predatory" payday lender to make a complaint to the Financial Ombudsman Service, which can help consumers to claw their money back.

Citizens Advice said it that in three-quarters of clients' cases it has examined, borrowers would have grounds to take their complaint to the ombudsman .

Payday lenders have said they have been working to improve standards and make sure loans are only given to those that can afford them. They have said that rogue lenders who have tarnished the whole industry should leave the sector.