August 4, 2008
OFT set to probe payday loan providers
The UK’s economic regulator, the Office of Fair Trading ( OFT ) is set to commence an investigation into the financial firms and agents that offer short term high interest loans to those individuals who require cash until they receive their next wages. These loans which are known as payday loans are increasing in popularity as the onset of the credit crunch has meant that more people require a quick financial fix to help with everyday living costs..
Companies that offer these loans are regulated by the Financial Services Authority . The OFT will conduct a study into whether payday loan customers are receiving fair treatment and has stated that its investigation is part of a wider examination into the policies and practices of loan providers.
Consumer campaign groups have criticized payday loan lenders for the high annual percentage rates ( APR ) that are attached to their products.
The Bank of England has recently released data that shows that the UK’s personal loan total had risen by around £0.4 billion in June.