The UK’s trading watchdog has been slammed by the National Audit Office (NAO) over its failure to protect consumers from inflated credit fees.
A report from the NAO, published yesterday, found that the Office of Fair Trading (OFT) “is not delivering value for money because it is not minimising harm from unscrupulous trading practices”.
The report found that consumers lost at least £450m last financial year because the regulator did not address problems associated with companies in the consumer credit markets, such as credit card firms and payday lenders.
The NAO said that insufficient sums spent on the issue was to blame for the watchdog’s failures. The OFT spent £11.5m regulating the consumer credit market last year, which was “not enough given the size of the market and levels of consumer harm”.
However, the report did praise the office in part, saying the OFT’s work was effective when carried out. The NAO estimated that the OFT saved consumers £8.60 for every £1 it spent on enforcing regulations.
NAO head Amyas Morse said: “The government’s proposed new regulatory system will need to address these problems.”
The Department for Business, Innovation and Skills responded by saying that the Financial Conduct Authority, due to be set up in 2014, will be better placed to handle unscrupulous lenders due to it having wider powers.