Two payday loan companies have been forced to surrender their consumer credit licences after a crackdown on payday lenders by the OFT (Office of Fair Trading). Three more companies could lose their licence as they are currently being investigated too.
The two companies that have surrendered their consumer credit licences are The Payday Loan Company Ltd and Anfield Cheque Cashing Centre. The Payday Loan Company operated under several names including paydayloans.co.uk and Cashnet. The two companies are now no longer allowed to trade. The three other companies being investigated for bad business practices can’t be named at the moment due to legal reasons.
The OFT sent letters to fifty of the top payday lenders, asking them to overhaul their businesses and the way that they operate with immediate effect. The companies were given 12 weeks to comply. Areas of concern noted were the failing of to conduct sufficient checks to see if the short term loan applicants could afford the loans they were asking for, failing to explain how payments would be collected and aggressive debt collection techniques.
Three payday lenders have already had their licences revoked as part of the review, aimed at whipping the payday lending industry into shape.
A spokesman for the Office of Fair Trading said: ‘The OFT has also announced that it has formal investigations open into the practices of three payday lenders. In addition, three payday lenders have also had their licences revoked and two others have surrendered their licences since publication of the OFT’s review of the sector in March.’