PUBLIC Accounts Committee chairwoman Margaret Hodge has revealed that the Office For Fair Trading (OFT) ‘have never fined a lender for exploiting individual clients’.
In fact, a whole mass of ‘payday lenders’ are super-exploiting millions of working class and middle class poor, and getting away with imposing hundreds of per cent interest rate charges.
The coalition-created poor are having the millstone of permanent and ever-increasing interest rate debt hung around their necks by the payday loan vultures.
The government’s austerity policies have created the poor and the new industry that has sprung up to prey on them, without any real intervention by the alleged regulatory bodies.
Such is the business opportunity that the coalition has created, that payday loan companies are mushrooming up on every high street to take advantage of the poor, and among them many thousands of crisis-hit families.
The poor are being pushed deeper and deeper into debt, while ‘respectable’ businessmen and women make fortunes out of their misery.
The House of Commons Public Accounts Committee has said that the unscrupulous behaviour by the ‘shabby end’ of the UK consumer credit market costs consumers at least £450m a year.
In fact, since the established banks are refusing to lend money, there is no ‘non-shabby’ end of the market.
The Public Accounts Committee has criticised the OFT for failing to act quickly to stop lenders consciously targeting vulnerable people.
The UK’s ‘consumer credit market’ is one of the largest in Europe, the committee’s report said, with £176bn lent to individuals in 2011-12.
The Committee put it on record that, since the 2008 financial crisis, door-to-door and payday lending to the poor has risen significantly.
Two million ‘payday’ loan customers are offered and encouraged to take short-term, high-interest loans which rapidly lead to their debts spiralling out of control, landing the customers’ in a state of permanent servitude to the lenders.
The parliamentary committee was scathing in its view of the non-regulation by the OFT, which has the power to grant or revoke the credit licences that allow these lenders to operate.
‘The OFT has been ineffective and timid in the extreme. It passively waits for complaints from consumers before acting,’ said PAC chair Hodge.
She added an amazing fact concerning the OFT: ‘It has never given a fine to any of the 72,000 firms in this market and very rarely revokes a company’s licence.’
She also accused the OFT of super-indifference in relation to their regulatory task, since it lacked basic information about operators and how much they lent, and it failed to effectively prevent directors of loan companies who lost their licence – a process that took up to two years – from setting the business up again under a different name.
Investment by the OFT in regulating the sector was also described as ‘paltry’, with fees charged to lenders unrelated to their size.
The Committee called for a limit on the number of times a short-term loan could be ‘rolled over’ by door-to-door lenders month to month, pushing up the interest charged.
Next year, some of the OFT’s responsibilities will move, with regulatory responsibility shifting to the Financial Conduct Authority (FCA).
There is no doubt that this will be just ‘OFT Mark 2’.
On Tuesday, Citizens Advice suggested that the payday lending industry was ‘out of control’, with loans given to people aged under 18, to those with mental health issues and to individuals who were drunk at the time.
In fact, it is crisis-ridden capitalism that is out of control and, like the mad dog it is, has created this ‘payday loans’ industry for permanently enslaving and humiliating the poor, and for making the rich, richer. Such a system cannot be regulated. There is only one way to deal with it, and that is to overthrow it with a socialist revolution.
