Pay Day Loan Scandal Timeline and OFC Steps to Put It on Closure
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Payday loan scandal has affected several UK individuals who were in need of urgent cash in recent years. Here, you can get a timeline overview on this scandal. This scandal has entered in UK in 2007 from US lending option where it has already affected several individuals for years. In 2008, Business secretary Vince Cable sound alarm over the arrival of payday lenders and stated that it is affecting credit score of individuals badly. Leading financial institutes have complained about this scandal to office of fair trading in 2009. They have stated that payday lenders are using payday lenders are potentially targeting younger consumers who are already dealing with poor financial situation and using their social networks to sell these rouge financial product. OFT has decided to take some efficient action against it and for this it has published a review of high cost credit in 2010.
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OFT has stated in February, 2012 that it would take necessary steps towards payday lenders after reviewing the loan scheme if there are any abuses. October, 2012 was a turning point in this loan option. UK’s biggest payday lender Wonga’s shirt sponsorship with Newcastle has been announced. It prompts protest from consumer groups. Finally in November, 2012 OFT has announced highlights of its review on payday loans which widespread the failing of payday industry and stated that it will inspect 50 leading pay day lenders.
It has been determined that payday loans are available at higher rate of interest which are quite costly for borrowers. Debt consultants also stated that logbook loans are better option than payday loans though these are available at lower rate of interest in compare of payday loans. It has been concluded that OFT will take some effective steps soon to stop payday loan abuses. However, payday lenders have already received warning from OFT to lower rate of interest.
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