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Loan charges: OFT to investigate payday lenders

The Office of Fair Trading (OFT) is to investigate payday lenders that have been targeting the most financially vulnerable people in Scotland, according to a debt management solutions firm.

Scottish Trust Deeds revealed that Scotland has the highest level of payday loan usage in the UK, and now the OFT is to look into how this dangerous credit, which can lead to expensive loan charges, is being sold.

Many people are led into a vicious cycle of debt that is very difficult to get out of when they take out these high interest loans, as they then look to more credit to pay them off.

The Consumer Credit Act ensures that lenders have responsibility to sell products based on someone's financial situation, which means not giving loans to those who are in financial difficulties.

"It was only a matter of time before payday loan lenders went under the microscope," said a spokesperson for Scottish Trust Deeds.

"Some of the stories consumers are reporting about the size of the debt they have built and the speed at which it happened are truly shocking. This investigation by OFT cannot come soon enough."

John Fieldman
Having worked in the city for 19 years, John's main focus is interest rates and corporate finance.ADNFCR-2776-ID-801525529-ADNFCR

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