In April the Office of Fair Trading (OFT) warned 50 payday lenders (90% of the market) to clean up their acts and imposed a 12-week deadline for them to fully comply with its requirements.
In an update on its website, the organisation said 14 lenders had confirmed they were leaving the £2bn market.
The OFT said three of the 14 lenders had already surrendered their licences and were, therefore, not required to provide it with an audit report ahead of the deadline. The remaining 11 continue to trade in other areas of business that require a credit licence and have been required to provide an audit report, it added.In total, the OFT has received audit reports from 46 lenders. One business failed to meet the deadline imposed by the OFT.
The watchdog said the business had informed the OFT that it is no longer lending and will, at the OFT’s insistence, be submitting an audit report.
The Competition Commission also referred the matter to the Financial Conduct Authority last month for a full-blown investigation, before the financial regulator takes charge of consumer credit next April.
It said it became alarmed during its own investigation into 50 payday lenders earlier this year, which uncovered a widespread lack of compliance with various relevant laws.
The investigation found that lenders were not clear about the cost of their loans and were charging interest fees of up to 5,000% APR. They also made it difficult for borrowers to switch lenders when loans are rolled over, the OFT found.
OFT senior director for consumer credit David Fisher said: “We are evaluating the audit reports sent in by payday lenders and will announce any further action in due course.
“Should any lenders fail to demonstrate they are fully compliant we have several options open to us to protect consumers, including suspending or revoking their licences.”
