Office of Fair Trading puts up limited defence to 'timid' jibe over payday loans

The Office of Fair Trading has declined to participate in broadcast interviews regarding a report that has criticised it for being 'timid' in its enforcement of the consumer credit and payday loans market.

Margaret Hodge: critical of OFT
Margaret Hodge: critical of OFT

Although it has issued a press statement in reaction to the report from the Public Accounts Committee, it chose not to join committee chair Margaret Hodge MP on BBC Radio 4’s Today Programme this morning.

Hodge criticised the regulator for failing to proactively identify risks of malpractice, having never fined any of the 72,000 firms in the market, and for lacking information about the level of harm due to firms not complying with the Consumer Credit Act.

OFT media relations manager Russell Guthrie said the OFT had made a decision not to take part in broadcast coverage. ‘Everything we want to say is in our press statement,’ he added.

The 300-word statement, attributed to a spokesman, opens: 'Far from being timid, the OFT has taken strong, targeted action to tackle the areas of greatest risk to consumers. In the last financial year alone the OFT has revoked the licences of some of the UK's largest credit brokers and debt management firms, and taken formal action in more than 85 other cases.

'Around 100 debt management companies have also left or been refused entry to the market since 2011, and the leading 50 payday lenders have recently been given 12 weeks to change their business practices or risk losing their licences. Both cases follow proactive reviews of entire sectors.’

Regulation of the consumer credit market will pass to the new Financial Conduct Authority, the successor to the Financial Services Authority, in 2014.

The Public Accounts Committee report stated: ‘In their response to us, we expect the OFT and the FSA, on behalf of the new regulator in waiting, to set out their immediate plans for getting to grips with the problems we highlight in this report.

‘It is encouraging to see that, since our hearing, the OFT has announced plans to crack down on unscrupulous behaviour by the 50 largest payday lenders. We will be expecting the OFT to show that this marks the start of a genuine step up from the timid approach that was evident at our hearing – and to follow through on its threat to revoke licences if these lenders do not mend their ways.’

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