'Household names' among four payday lenders that face being shutdown as watchdog receives complaint

Four payday lenders, including two 'household names', face being shut down after Citizens Advice sent a complaint about the firms to the Office of Fair Trading.
The charity refused to name the lenders but said that it believes they have been ‘causing significant distress’ to customers.
Under new powers from 19 February, the OFT can immediately suspend the consumer credit licence of companies to protect consumers - if it believes businesses are using practices that deceitful, oppressive or unfair.

Crackdown: Citizens Advice has called on the OFT to use new powers to suspend the credit license of four payday lender - two of which are 'household names'.

At present companies can continue to trade as normal while being investigated - a process which can take years to complete.
The charity said that it has handed over a 'dossier of evidence' to the OFT including problems with:

• firms pushing inflated fees and charges on customers;
• continuing to take money when debts have been paid off;
• obstructing customers from making repayments online or over the phone then charging late fees; 
• harassment by repeated telephone calls, text messages and emails to repay debts;
• chasing people for debts on loans when the individual didn’t apply for a loan in the first place;
• aggressive and abusive staff.

Gillian Guy, Citizen’s Advice’s chief executive, urged the OFT to take immediate action and suspend the credit licences of the companies involved.
She said: ‘These firms pose a real risk to people looking to get a short term loan to help tide them over.
‘Our evidence shows these lenders are behaving as a law unto themselves.  Excessive fees and charges are escalating debts and people are worried sick as companies bombard them with texts, emails and phone calls often overstating their debt collection powers.’

The CAB would not name the companies it has referred to the OFT, saying only that two of them were 'household names'.
Wonga is known to be the largest payday lender. The company would not say if it was one of those companies named.  A spokesman said: 'This is only something the CAB or OFT could answer as the correspondence is between them.’
The charity has also reported three debt collection companies to the OFT asking for their licences to be suspended.
A spokesman from the OFT said: ‘The OFT will now be considering this letter but it is not appropriate to discuss its detail any further at present.
‘We would like to highlight that the new power to suspend can only be used in the most serious cases of immediate harm, but we won't hesitate to use it where cases fit that bill. In addition we expect to report within the next few weeks on our on-going review into the payday sector.’
In November the OFT wrote to 240 payday lenders to warn them of on-going bad practices in the sector as part of its review. It is expected to report its findings in less than two weeks’ time.