AY lenders were in the spotlight yesterday as Wonga, Mr Lender and QuickQuid executives appeared in front of a parliamentary select committee to defend against criticism from the Office of Fair Trading (OFT).
Wonga’s head of regulatory and public affairs, Henry Raine, revealed that the company had been forced to make changes to its sales practices following an OFT investigation in March.
During the meeting Raine defended the changes, which he will disclose to the committee in writing. He said, “We weren’t censured by the OFT. We’ve been asked to make various changes.” A Wonga spokesperson after the meeting said the process with the OFT is ongoing and the company has no details to share on the changes Raine mentioned.
The Business, Industry and Skills Committee meeting ended just hours after Wonga co-founder Jonty Hurwitz unexpectedly resigned from the company’s board of directors.
Labour leader Ed Miliband jumped on the actions of Wonga and other lenders yesterday, claiming the firms were running riot.
In March, 50 payday lenders, accounting for 90 per cent of the market, were given 12 weeks following the publication of the OFT report to prove they have addressed the areas of non-compliance identified.
Since then 19 lenders have notified the OFT that they are leaving the payday market, three lenders have had their licences revoked and three have surrendered their licences.
“The OFT continues to have concerns about practices in the payday lending sector, including failure to conduct appropriate affordability checks, misuse of continuous payment authorities, excessive rollovers and aggressive debt collection,” the OFT said.
“The OFT is reviewing detailed evidence on 18 payday lenders and currently has two enforcement cases at an advanced stage,” an OFT spokesperson added.
Regulation for the consumer credit industry is due to pass to the Financial Conduct Authority from April 2014.