The Office of Fair Trading (OFT) has told payday lenders that its powers to immediately suspend consumer credit licences will only be used in “urgent” circumstances.
David Fisher, director of consumer credit at the OFT, told delegates at the Consumer Credit Trade Association (CCTA) conference on 8 November that its new powers to intervene would be employed “carefully” and only in order to protect consumers.
The organisation launched a consultation on the new powers last month, with final guidance due to be published in February 2013.
Under the new rules, businesses will not be able to continue trading until the end of the appeals process.
At the CCTA conference Peter Stimson, managing director of CoreLogic Teletrack, a UK credit reference agency that serves the short-term credit market, revealed that the average income of a payday borrower is £16,600.
In his presentation, Stimson said that its data on two million UK payday applicants “strongly indicated” that, on average, they are in lower paid jobs with less career and income progression.
Figures from CoreLogic found a strong correlation between age and borrowing, with 57% of those who had taken out a payday loan under the age of 35 and 34% over the age of 40, among a sample of one million payday borrowers compared to mortgage customers.
According to Stimson, one in eight online applications for payday loans is approved.
But Henry Raine, head of regulatory at payday lender Wonga, questioned the validity of CoreLogic’s data on the basis that it was not representative of a large proportion of the short-term credit market.
He added: “A number of us don’t subscribe to your service.”
When Stimson challenged him to disclose Wonga’s figures on the industry, Raine referred delegates to its OpenWonga website.