THE net is closing on loan sharks – thanks to the tireless campaigning of a Wigan MP.
Bosses at the Office of Fair Trade (OFT) announced today sweeping new powers that could INSTANTLY suspend the consumer credit licenses of pay-day loan companies alleged to have broken consumer protection laws.
Currently they can continue trading while an investigation takes place – snaring hundreds more often desperate and needy families in the process.
The proposed new powers are expected to come into effect next year.
It is a notable achievement for Makerfield’s Yvonne Fovargue, who was a Citizen’s Advice Bureau (CAB) boss for almost a quarter of a century before entering parliament.
Ms Fovargue said: “Voluntary regulation has failed miserably and the new power to suspend gives the OFT the power to crack down on the irresponsible actions of an industry making huge profits on the back of vulnerable and low income borrowers.”
Her detailed submission to the OFT’s Review of the Payday Lending sector follows a long campaign by her to see a ‘power to suspend’ introduced.
She is also the current chairman of the All Party Group on Debt and Personal Finance.
Working for the CAB, she spent much of her time counselling debt-laden households who borrowed from back-street operators because their poor credit rating saw them being turned away from banks and conventional sources of loans.
Ms Fovargue explained the new law will allow the OFT to suspend the all-important consumer credit licences with immediate effect – or from a date they subsequently specify.
It will “strengthen significantly” the OFT’s ability to protect households who have become debtors to loan companies, allowing it to quickly put a stop to the activities of businesses that otherwise would be able to operate until the end of an often lengthy appeals process.
But the OFT will only be able to use the power where there is an urgent need to protect consumers from harm.
In the most serious cases, which include those where there is evidence of physical harm to the threat to loan shark clients, the OFT want the power to suspend a licence with immediate effect.
The OFT’s director of credit David Fisher said that this was an “important” new power that would allow it to “deal quickly” with businesses who posed an “immediate and serious risk” to consumers.
He said: “Following consultation with interested parties, we expect to use the power in serious cases where it is essential we prevent a businesses operating to protect people.
OFT chiefs says the consultation will now run for three months, while the final guidance is now likely to be published in February.
She insists the industry was currently operating in a manner that “can and does” penalise vulnerable consumers and was relieved by the announcement.