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Press Statement 2013 -

Reaction to the report by the Public Accounts Committee on the regulation of consumer credit

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41/13   31 May 2013

Commenting on today's report by the Public Accounts Committee on the regulation of consumer credit, an OFT spokesperson said:

'Far from being timid, the OFT has taken strong, targeted action to tackle the areas of greatest risk to consumers. In the last financial year alone the OFT has revoked the licences of some of the UK's largest credit brokers and debt management firms, and taken formal action in more than 85 other cases.

'Around 100 debt management companies have also left or been refused entry to the market since 2011, and the leading 50 payday lenders have recently been given 12 weeks to change their business practices or risk losing their licences. Both cases follow proactive reviews of entire sectors.

'The purpose of the National Audit Office report, around which the Committee's work was based, was to make recommendations for the future regulatory regime based on an examination of the value for money of the existing arrangements. The National Audit Office commended the OFT for delivering a good return, saving consumers an estimated £8.60 for each £1 it spent on enforcing the law.

'We are disappointed that the Committee has not acknowledged the constraints of the legislation under which the OFT currently operates which, as the NAO found, was not designed to provide a supervisory approach to addressing potential consumer harm. As the NAO recognised, these constraints include a lack of regulatory powers and the ability to impose fines only in very limited circumstances.

'We strongly support the Government's decision to give the Financial Conduct Authority new supervisory powers from 2014 to enable them take a more interventionist approach with increased resources for the new regime.'

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