Price Controls on Short Term Loans not Needed: OFT

Tues, June 15, 2010

The Office of Fair Trading (OFT) has backed away from recommending price controls on expensive forms of short-term borrowing.

The watchdog has been scrutinising the pawnbroking, payday loan and home credit businesses since July last year.

It said although such borrowing was expensive, it met a need for people who could not otherwise borrow cash.

The OFT said the government itself should take action if it thinks there is a problem.

"In a number of respects, these markets work reasonably well in that they serve borrowers not catered for by mainstream suppliers, complaint levels are low, and there is evidence that for some products, lenders do not levy charges on customers who miss payments or make payments late," the OFT said.

Source: News.bbc.co.uk