A UK Parliamentary committee blasted the Office of Fair Trading -- a
consumer watchdog agency that is supposed to regulate moneylenders --
for doing effectively nothing to curb the growth of usurious, predatory
moneylenders who attack poor and vulnerable people. There are 72,000
consumer credit firms in the UK, some chargin annual interest rates of
4,000%, but the OFT has never fined a single firm for breaking lending
rules. On some rare occasions, it did shut down firms, but did nothing
to stop them from reopening immediately under another name.
This week the charity Citizens Advice said it knew of cases where loans
had been given to under-18s, to people with mental health issues, and to
people who were drunk at the time of securing the loan. One client who
took out a £50 loan was targeted with emails and texts offering more
cash and ended up with debts of £800.
"Some of these lenders use predatory techniques to target vulnerable
people on low incomes, encouraging them to take out loans which when
rolled over with extra interest rapidly become out of control debts,"
the committee's chair, Margaret Hodge, said. "Meanwhile, the OFT has
been ineffective and timid in the extreme. It passively waits for
complaints from consumers before acting."
PAC's report said the OFT lacked information on how much lending was
being done by each firm, and about how different people used consumer
credit. A study commissioned from the National Audit Office suggested
the scale of consumer harm was at least £450m a year, but the OFT was
accused of lacking detailed information on the types of harm suffered by
different groups of borrowers.
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