Pay Day loan sector set for investigation by the Competition Commission over "deep rooted" problems
The Competition Commission is set to implement a full scale investigation into pay day lending over what it claims are “deep-rooted” problems within the system.
The decision to investigate follows a period of consultation and includes areas of concerns such as the poor credit history found amongst a large number of borrowers, variable compliance levels by firms to the law and a difficulty for consumers to compare the full cost of a loan.
Also of concern was a lack of clarify from lenders as to how the payments would be collected.
Responses are expected from all 50 payday lenders contacted earlier in the year by the end of July, although five of those 50 companies have claimed to have now left the sector.