A DECISION to refer payday lenders for a full-blown investigation has been welcomed by Citizens’ Advice Bureau chiefs.
The Office of Fair Trading has uncovered “deep-rooted” problems in the payday loan market and is concerned that lenders are mainly competing on the availability and speed of loan approval as opposed to how much it will cost the borrower.
The trading watchdog says loans are becoming far more expensive than struggling borrowers had expected, and payday lenders will now face a full investigation by the Competition Commission.
The news has been welcomed by Hartlepool Citizens’ Advice Bureau bosses who say they “regularly” get Hartlepool residents asking for help who have signed up for as many as nine payday loans.
Joe Michna, manager of Hartlepool CAB, said: “It’s a regular occurrence for us for clients to come in after getting into problems with payday loan companies and that’s because it’s far too easy for people to access these loans.
“It’s tempting for people who are in debt problems and are sat at a computer and all they need to do is put their name and address in and bingo, they have a loan.
“It’s ridiculous what we see, because it’s so easy we have people coming in who haven’t signed up for one or two of these loans but eight or nine.
“I don’t have an exact figure off the top of my head of how many clients we have who have got into problems, but it’s frequent and we welcome this decision.”
The Office of Fair Trading’s decision to make the referral is the culmination of a large-scale investigation into the £2billion payday sector, including spot checks on household names.
The OFT said it made the referral because it continues to suspect that features of the market “prevent, restrict or distort competition”.
Mr Michna added: “There are a number of issues with payday loan companies and the way they address applications but we want people to know there are other ways out.
“People who are in debt try to muddle through in the hope they will win the lottery.
“What people should do is seek advice and come to see us at the earliest possible opportunity.
Hartlepool CAB, based in Park Road, holds drop-in sessions on a Monday, Wednesday and Friday from 9.30am-3pm.
Everyone is welcome.