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Lancashire credit unions to benefit from payday lender crackdown
LANCASHIRE’S principal trading standards officer and MPs have welcomed a crackdown on ‘widespread irresponsible lending’ by payday loan companies.
Lee Ormandy said it was crucial firms observed their licences or were stopped trading.
He urged East Lancashire people with short-term cash problems to use credit unions instead.
Blackburn Labour MP Jack Straw and Pendle Tory backbencher Andrew Stephenson also supported yesterday’s action by the Office of Fair Trading.
It gave the 50 biggest payday lenders 12 weeks to change their ways or risk being put out of action after uncovering evidence of ‘widespread irresponsible lending’.
The OFT referred the payday market to the Competition Commission over ‘deep-rooted problems’ in how firms compete for business. The OFT found the 50 lenders, 90 per cent of the market, were failing to comply with legal standards. They face losing their licences to trade, if they fail to clean up their act.
The regulator said irresponsible lending was not confined to a few rogue companies but spread across the industry, causing ‘misery and hardship’. Despite payday loans being described as one-off, short-term loans costing £25 per £100 for 30 days, half of payday lenders’ revenue comes from longer loans which cost more because they are rolled over.
Mr Ormandy said: “The county council don’t want people to go to loan sharks who are illegal and dangerous. We agree with the OFT’s conclusions about payday lenders and welcome their taking action to make sure the firms comply with their licences or face closure.
“We recommend people make use of credit unions such as those in Pendle, Burnley, Bacup and Darwen and Blackburn.”
Mr Stephenson said: “I am really pleased that the OFT is acting against these fly-by-night lenders. ”
Mr Straw said: “This is good news and long-overdue. These firms exploit misery.”
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