Audit shows Office of Financial Institutions needs to do a better job
POSTED: Monday, July 14, 2014 - 4:21pm
UPDATED: Monday, July 14, 2014 - 5:16pm
BATON ROUGE, LA (NBC33) — Did you know nearly 60,000 households depend on pay day loans just to make ends meet? That's more than 20% of the state! But is it worth it? According to a new report out today, these people are being cheated by many payday loan companies.
The Office of Financial Institutions is supposed to regulate hundreds of pay day loan companies. Problem is, it isn't. What that means is thousands of people are getting charged excessive fees making it hard to ever bounce back.
Dianne Hanley helps people who are in debt all the time. She's part of Together Louisiana. When she saw the lengthy report the State Legislative Auditor's Office came out with, she was not too happy.
"I was surprised by it, but very, very disappointed at the depth of it. This really shines a light on why we need to better regulate payday industry in this state," Hanley said.
State Legislative Auditor Daryl Purpera said the Office of Financial Institutions is not keeping track of lenders.
"Borrowers get into a cycle of debt that they can't get out of and the fees are exorbinant, and that sort of thing," Purpera explained. "What we saw is they don't have adequate procedures to determine whether those loans are being illegally rolled over."
The payday loan companies that don't play by the rules are supposed to be penalized, but that is not happening.
"We saw that more than eight-thousand major violations where there should've been a refund made to the borrower, we saw that they didn't issue any fines and didn't issue any penalties," Purpera said.
This report said the Office of Financial Institutions did not follow up on most of those violations. It doesn't surprise Hanley.
"Well that tells me as a consumer that I am not safe going into this industry because it is not properly regulated. That's what the legislative auditor pointed out to me," Purpera said.
Hanley said this has been an on-going battle, and now it's time for the agency to step up and fix everything.
"People are being harmed today, have been harmed for years. So it's time for the process to start right now, and to have a lot of oversight and accountability."
So what do the people at the office of financial institutions have to say about the report?
"They agree with almost all of these findings and all of our recommendations, and what they're saying is they're going to do further studies on them, and try to implement those recommendations to try to better their program," Purpera said.
If you want to see the full audit for yourself, you can go here: http://www.nbc33tv.com/news/louisiana-politics/payday-lender-regulations