With fears growing about the debt collection practices of payday lenders in England, the Office of Fair Trading (OFT) now has the authority to suspend collection agencies that target certain vulnerable consumers.
The regulator can suspend licenses with immediate effect for a year. For the length of the suspension, a licensee will be treated under law as being unlicensed, according to OFT guidance published on Friday.
“Engaging in licensable activities while unlicensed is a criminal [act],” the guidelines say.
David Fisher, the OFT’s director of credit, says the new power "strengthens our ability to protect consumers from harm. We will not hesitate to use it in the most serious cases where there is an urgent need to protect people."
OFT officials said the regulator has “several investigations” open into aggressive debt collection practices, but could not specify how many.
The Citizens Advice charitable organization service reported last week that it had provided a dossier of evidence on four payday lenders that were "acting unfairly, thus exacerbating debt problems and causing significant distress" to consumers.
Problems uncovered by Citizens Advice include: firms levying inflated fees and charges; 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; and, aggressive and abusive staff.
Citizens Advice also has reported three debt collection companies to the OFT asking that their licenses be suspended.