Do you have a payday loan that you are struggling to pay off, and are being constantly harassed by the lender? If so, you might be interested to learn that the Citizens Advice Bureau (CAB) is calling for four major payday lenders to have their licenses suspended.
This comes after customers have told the CAB that they have been repeatedly called and harassed and that this has caused undue distress. The CAB state that they have urged the Office of Fair Trading (OFT) to use their new powers and to suspend these companies affected immediately.
New powers available to the OFT from 19 February 2013, allow it immediately to suspend the consumer credit license of companies to protect consumers, for example if firms are using business practices that are deceitful, oppressive or unfair. Currently lenders can continue trading as normal while being investigated.
Whilst the CAB have refused to name any of the four major payday loan firms involved, stating that they did not want to affect any investigation, they did admit that two of the lenders are household names.
The call for urgency has come after the CAB has investigated claims from customers of payday lenders charging excessive fees; continuing to take money when debts have been paid off; firms preventing customers from making repayments online or over the phone and then slapping them with a charge for late repayment. The CAB also stated that some of these companies had been harassing customers with repeated telephone calls, text messages and emails, as well as chasing people for debts on loans when the individual had not applied for a loan in the first place.
Citizens Advice’s chief executive, Gillian Guy, called on the OFT to take immediate action to investigate and suspend the companies involved. She said: “These firms pose a real risk to people looking to get a short-term loan to help tide them over,” she added: “Our evidence shows these lenders are behaving as a law unto themselves. Excessive fees and charges are escalating debts and people are worried sick as companies bombard them with texts, emails and phone calls, often overstating their debt collection powers.”
In a statement the OFT said: “The OFT will now be considering this letter but it is not appropriate to discuss its detail any further at present. We would like to highlight that the new power to suspend can only be used in the most serious cases of immediate harm, but we won’t hesitate to use it where cases fit that bill. In addition, we expect to report within the next few weeks on our ongoing review into the payday sector.”
Citizens Advice said it is “gathering evidence” of other lenders who are also found to be contravening OFT guidance. The charity said its Citizens Advice Bureaus in England and Wales advised 2.1 million clients with debt problems between April 2011 and March 2012 – 31% of the total problems dealt with.
If you have a problem with paying off a loan to a payday lender, your first course of action should be to contact the lender to see if an alternative payment plan can be arranged. If this is not available then contact your local CAB office.
Source: BBC News