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OFT crackdown on ‘pay-day loans’ is welcomed

17 Dec 2010

Citizens Advice Scotland (CAS) have welcomed today’s announcement by the Office of Fair Trading, warning PayDay Loan companies not to mis-use Direct Debit mandates to take funds from their customers’ bank accounts without their knowledge.

CAS Chief Executive Lucy McTernan said today,

“There is a very basic principle at stake here, which is that creditors should not be able to take money from a debtor without their permission or knowledge. That seems to us to be a fairly obvious requirement of a fair credit system.

“CAB advisers across Scotland often hear from people whose payday loan company have taken funds from their account in this way, without even informing them, nevermind asking for their agreement. In some cases this action took the customer into overdraft with their bank, which of course made them liable for hefty bank charges in addition to what they already owed the payday loan company, and so extended their debt through no fault of their own. Others were left unable to pay vital bills like rent, mortgage or food and fuel.

“This simply should not happen, and if the OFT is cracking down on the practice we would support them 100 percent.

“There will always be people on low incomes who need access to credit just to get by. But there are basic principles of fairness which must be observed: the terms and conditions of any credit agreement must be clear, and presented in a transparent way. And people should be able to control and prioritise their own finances, even when they are in debt.”

For interviews etc., please contact Tony Hutson on 0131 550 1010.

ENDS

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