|
|
OFT review reveals consumers living off high-cost credit
Wednesday 9th December 2009The Office of Fair Trading (OFT) has announced that it has begun to publish evidence from its high-cost credit review.
The summary of the review includes the results of a consumer survey, initial results from behavioural economics research, a review of international policy approaches to high cost credit, and evidence on the impact of the recession on competition in the market.
The research showed that the majority of consumers understand what types of credit are 'high-cost', but a significant number - over a quarter for some products - said they were fairly or very dependent on high-cost credit in their day-to-day life.
Consumers using high-cost credit noted that the speed at which money could be accessed was the main reason they took out these loans.
There was limited evidence to show that those who access high-cost credit shop around for better offers or different products. And surprisingly, around one-third of consumers using high-cost credit would still use the product if repayments were a third higher.
It was found that information on the total repayment amount is more helpful than an APR in understanding the cost of short-term credit. The evidence showed that some consumers do not always understand APRs and may sometimes use them incorrectly when making comparisons between very different products.
The OFT is inviting comments on the research in order to test the completeness and robustness of the evidence it has gathered. It expects to issue a final report next year setting out conclusions and recommendations.
Share this article:
Nowpublic
Digg it
Del.icio.us
Reddit
Newsvine
Related News Stories
‘Significant’ number of brokers owed commission by failed debt firmWednesday 28th July 2010
Bank worker embezzled £150,000 to pay off credit card debts
Wednesday 28th July 2010
Consumer credit regulation may be taken from the OFT
Wednesday 28th July 2010
Northern Rock director banned for continued misreporting of mortgage arrears
Wednesday 28th July 2010
Divorce on the rise again as debt-ridden couples save up for split
Wednesday 28th July 2010
Most Read News Stories
Barclays lifts lid on banking write-offsWednesday 20th February 2008
Send To Friend Print
RSS Feed
News Archive
Feedback:
If you have any queries about this news story or our news section, please contact us
