By Jonathan Davies
Payday lenders must show their prices on at least one price comparison website, according to the Competition and Markets Authority (CMA).
The new rules are designed to encourage competition between lenders after a 20 month investigation by the CMA found that most people did not shop around for their payday loans.
Payday lenders must also give customers a summary showing the full cost of the loan.
The CMA investigation also recommends:
- greater transparency on late fees and charges
- measures to help borrowers shop around without damaging their credit records
- expanding real-time data sharing services to help new lenders assess credit risks more accurately
- that websites selling potential borrowers' details to lenders should explain their role much more clearly.
"Our actions are aimed at making the market more competitive and further driving down costs for borrowers," said Simon Polito, chair of the CMA's Payday Lending investigation group.
"We think costs can be driven lower and want to ensure that customers are able to take advantage of price competition to further reduce the cost of their loans."
The competitions regulator said that it was already in discussions with one price comparison website about hosting payday loans. But if one does not emerge, the CMA said that payday lenders would be forced to set up their own price comparison site, regulated by the Financial Conduct Authority (FCA).