By Daniel Hunter
The Competition & Markets Authority (CMA) has outline new plans to force payday lenders to make their products available on price comparison websites.
The CMA said the proposals would increase competition in the payday loans market and bring greater benefit to customers.
“Greater price competition will make a real difference to the 1.8 million payday customers in the UK,” says Simon Polito, chair of the CMA’s Payday Lending investigation group.
“At the moment there is little transparency on the cost of loans and partly as a result, borrowers don’t generally shop around and competition on price is weak.”
In June, a report by the CMA found that a lack of competition could be adding £30-60 to customers bills. And in July, the Financial Conduct Authority (FCA) called for a cap on interest rates at penalty charges.
The CMA is also calling for:
– greater transparency on late fees
– customers’ ability to shop around without harming their credit ratings
– the expansion real-time data sharing services to help lenders assess risky customers
– more information for customers on how much they’ve paid over the past 12 months
The CMA will hold a consultation on the proposals and will publish its final report in over the new year.
The consumer group, Which? said it welcomes the CMA’s recommendations but called for even greater reform of the payday loan market. Which? executive director Richard Lloyd, said: “More must be done to put consumers firmly in control of their borrowing, starting with the Financial Conduct Authority looking at the whole of the credit market and cracking down on excessive fees across all forms of credit, including unauthorised overdrafts.”
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