Payday LPayment day L
Financial distress; Debts; Rollover of loans.
Payment day loan companies searched by watchdog
OFT has stepped up its research on payday lending companies as it turns out that Wonga, Britain's largest short-term borrower, saw its earnings increase by 300 per cent this year. Early this year, the OFT approved a review of the payday lending sector following a long-running The Independent survey.
Now the OFT is investigating allegations that payday creditors are irresponsible by disbursing mortgages without verifying whether borrower can afford it. It also focuses on the prolongation of credit so that those who neglect to pay back on schedule quickly end up with prohibitively expensive increasing debts.
The OFT has asked payday creditors during its crackdowns about how they deal with debtors who get into trouble as they find increasing proof that they are not treating them fairly. Investigations allow OFT or trade standardisation representatives to gain insight into the company's facilities, to monitor how the company is run and to view a company's documentation.
"One of the most pushy ways the OFT can act is to go to a company and search its records. It' a token of how proactive the OFT approaches payday lenders."
Mortgagors who say no to folks who payday l.....
Individuals with payday borrowing are routinely rejected for Mortgages. An agent said that in the last 12 month 85% of the mortgage requests he has been dealing with have been rejected, where the payday claimants had borrowed on their lending histories. Yet, whether disbursed or not, the brokers cautioned that the bare presence of a payday facility will have a very detrimental effect on a borrower's eligibility for a hypothec.
Clariant cautioned that some mortgages financiers have a total prohibition on payday loans clients. He said that both D equity and Kensington will not be lending mortgages to anyone who has taken out a payday or more than one payday in the last three month in the last 12 month.
Payday loans have a total volume of 2 billion pounds and are used by about 1.2 million individuals per year. Currently about 20% of all mortgages are refused.