Earlier this month, the Louisiana Legislative Auditor's office released a report that examined the oversight and regulation of payday lenders by the state Office of Financial Institutions.
The OFI is part of the Office of the Governor and oversees and licenses all financial institutions with the state. The institutions internal policies state that each payday lender should be examined at least once every for years to ensure regulations are being followed.
As part of the oversight, the OFI approves licenses for payday lenders who meet set criteria and then examines the lender within six months of the license issue and two more times within three years to ensure regulations are being followed. A lender without violations will enter the "once every four years" review cycle while a lender with a violation will be reviewed the next year.
According to a release from the auditor's office, this process is not running as smoothly as it should be to ensure consumers are protected.
“Overall, we found that OFI needs to strengthen its examination, follow-up, enforcement and complaint procedures to ensure it is effectively regulating payday lenders,” the performance audit said. “OFI cannot ensure that payday lenders are adhering to state laws and that borrowers are protected from improper payday lending practices.”
Further, the state auditor said OFI did not impose any penalties on payday lenders for violating state law between Jan. 1, 2010 and June 30, 2013, despite citing 8,315 violations, including almost 8,100 for major violations. "By not assessing penalties [from Jan. 1, 2010 to June 30, 2013], OFI is failing to hold lenders accountable for not adhering to state law," the auditor's report states. "In addition, payday lenders may not be deterred from repeatedly violating the law.”
A regional tabulation of violations and oversight failures was not provided as part of the report.
According to data compiled within the report, a total of 329 payday lenders operated 965 locations within Louisiana during calendar year 2013 with nine in Morehouse Parish, 40 in Ouachita and two in West Carroll. A payday loan is defined as a loan of $350 or less that is intended to help borrowers meet expenses until their next payday.
Earlier this year, legislation failed to pass in the state senate that would have limited the number of payday loans an individual could secure within a calendar year.