The government’s consumer watchdogs have decided there is no need to change the regulations for payday loan companies.
The Office of Fair Trading has published its report into payday lending as it affects Manx consumers.
The same issue has caused a lot of controversy in the UK as companies such as Wonga have been criticised for imposing high interest on borrowers.
However, the Manx OFT concludes:
l There is no evidence of significant concern from actual local consumers who chose to take out payday loans.
l Local payday lenders are far more compliant with the UK standards of responsible lending than their UK counterparts.
l There is no evidence to support the need for upgraded regulation for local moneylenders.
l Manx consumers who choose to access the UK market are currently exposed to the same level of bad practice as UK consumers.
l Provided that the UK authorities, through the reference to the Competition Commission, resolve the current difficulties, the ability to access the UK online market offers enhanced consumer choice and competition in the market place.
l While it has been suggested that there should be an interest rate cap on the recovery of credit debts through Manx courts the OFT is satisfied that section 11 of the Moneylenders Act 1991 offers sufficient protection from extortionate transactions.
In March the United Kingdom Office of Fair Trading published a damning report into the payday loan industry in the UK.
It concluded that it had found fundamental problems with the way the payday market works and widespread breaches of the law and regulations, causing misery and hardship for many borrowers.
In the light of the developments in the UK, the OFT here decided it should undertake a review of payday lending as it impacted upon local consumers.
David Quirk MHK, the chairman of the Manx OFT, said: ‘In our various roles we will continue to monitor the moneylending market and will consider any future need for enhanced regulation based on emerging evidence.
‘We will revisit the issue of local consumers accessing the UK payday loan market following the outcome of the current UK market review.’