2356percent

Let's STOP 'payday' loans with typical APRs like 2,356%

OFT review 'amounts to a green light to 2500%+ loans'

The Office of Fair Trading has published its review of the high-cost short-term lending market in the UK and concluded that - while consumers do not benefit from sufficient competition between lenders - the market works 'reasonably well'.

However, in its statement announcing its findings, the OFT acknowledged the need for Government to consider action in order to safeguard consumer interests.

Announcing the findings of its review, OFT Director of the Credit Group Ray Watson said: "Our report has found that people who use high-cost credit have limited options and find it difficult to exercise what choice they have to obtain the best deal. This means that competition between suppliers is less effective than it might be.

"The recommendations we're making today would deliver worthwhile improvements to these markets but more radical approaches, outside the remit of the OFT, need to be examined by the Government if the fundamental and longstanding issues of lack of consumer power and limited supply are to be tackled.'

You can see the OFT's statement and links to the full published review at its website.

 The 2356percent campaign welcomes the OFT's review. We recognise that the OFT is powerless to intervene in a marketplace where there is insufficient competition, despite acknowledging that greater competition between lenders is likely to be to the benefit of consumers. We also welcome the OFT's acknowledgement of the need for Government scrutiny of the payday lending sector. 

But the OFT's conclusions clearly demonstrate that an absence of consumer choice exists because lenders choose not to behave competitively. In effect, its review amounts to a green light to high-cost short-term lenders to carry on lending at 2,500% or more.

In the absence of sufficient competition, the need for regulatory intervention to ensure that borrowers of short-term loans are afforded the same protection as investors in savings and investment products, is apparent. 

We renew our call for the Government to take steps to bring payday lending under the ambit of a regulatory body that is able to intervene in the conduct of businesses offering short-term loan products in the UK. The Government must transfer regulatory responsibility from the OFT to the Financial Services Authority (FSA) and its successor consumer protection body.

Leading Lib Dem MP becomes first Parliamentary supporter of 2356percent's fair payday loan campaign

Liberal Democrat Shadow Foreign Affairs Minister, Jo Swinson MP, has become the first Member of Parliament to back the 2356percent Facebook campaign calling for fair payday loan APRs.

The East Dunbartonshire MP (pictured above) has joined more than 220 members of the campaign's Facebook group - launched just one month ago - who are concerned about the typical APRs being offered by short-term 'payday' lenders like Quickquid.co.uk (2,356%) and Wonga.com (2,689%).

Jo said: "Despite all the lessons that we should have learned from the liquidity crisis, it's alarming that potentially irresponsible lending and inappropriate borrowing continues to thrive. It is not simply an issue of the high cost of the loans in terms of money, but the high social and emotional costs upon relationships, families, homes and communities of either failing to manage any resulting debt or being drawn into a cycle of habitual borrowing.

"I understand that the Office of Fair Trading is expected to report on its review of the short-term sub-prime lending market soon. I wish the 2356percent campaign every success in seeking to influence the debate over the fairness of existing short-term lending practices and the need to create new ways for people on low incomes to borrow at a much lower cost and at less risk to their financial well-being."

Campaign organiser, Ian Thomas, said: "I'm sure every member of our campaign will be as delighted as I am that Jo has chosen to join the Facebook group. It's a huge boost to have the backing of such a significant public figure.

"It is support from people like Jo that is sustaining the momentum which we have begun to build thanks to the Facebook Group. It's a great way to enable lots of people - each individually alarmed by the cost of payday loans - to gather together and play their part in influencing the future shape of short-term lending in the UK."

To join in the Campaign simply follow the link and click 'Join Group' here: 2356percent at Facebook

OFT review into 'payday' lending expected in Spring

Well I'm learning stuff all the time.

Yesterday I was pointed in the direction of an Office of Fair Trading (OFT) review of 'payday' lending in the UK by Which? Money on Twitter.

The OFT, which is the body responsible for monitoring consumer lending  - I learned that via @moneymadeclear - the FSA's consumer information service - expects to report its findings in Spring 2010.

If you're interested, the OFT has published interim details - including consumer survey findings - of the review which is also available at the OFT site.