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| Payday lenders should face more price competition, CMA says | Payday lenders should face more price competition, CMA says |
| (35 minutes later) | |
| Payday lenders should make details of their products available to price comparison websites to encourage greater competition, the Competition and Markets Authority (CMA) has said. | |
| The move is part of a set of proposals for reforming the controversial payday lending market set out by the CMA. | |
| It also recommends that websites selling potential borrowers' details to lenders should explain their role much more clearly. | It also recommends that websites selling potential borrowers' details to lenders should explain their role much more clearly. |
| The CMA will consult on the proposals. | The CMA will consult on the proposals. |
| "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. | "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." | "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." |
| The CMA also proposes: | The CMA also proposes: |
| The CMA says it will publish its final report "at the turn of the year". | The CMA says it will publish its final report "at the turn of the year". |
| Price cap | Price cap |
| In June, the CMA found that there was not enough price competition between payday lenders, meaning customers could be paying too much for their loans. | In June, the CMA found that there was not enough price competition between payday lenders, meaning customers could be paying too much for their loans. |
| Lack of competition could be adding £30 to £60 a year to customers' bills, it found. | Lack of competition could be adding £30 to £60 a year to customers' bills, it found. |
| Economic Secretary to the Treasury Andrea Leadsom said: "The government is determined to tackle the problems in the payday lending market and protect consumers. | Economic Secretary to the Treasury Andrea Leadsom said: "The government is determined to tackle the problems in the payday lending market and protect consumers. |
| "We welcome the CMA's latest report in its investigation into the payday lending market. We look forward to its final report in due course." | "We welcome the CMA's latest report in its investigation into the payday lending market. We look forward to its final report in due course." |
| But consumer groups have responded with caution to the report. | But consumer groups have responded with caution to the report. |
| "These proposals, alongside other reforms to the payday market, will be good news for millions of borrowers but information alone will not be the answer to the bad practices found across the credit market," said Richard Lloyd, of consumer association Which?. | "These proposals, alongside other reforms to the payday market, will be good news for millions of borrowers but information alone will not be the answer to the bad practices found across the credit market," said Richard Lloyd, of consumer association Which?. |
| "More must be done to put consumers firmly in control of their borrowing, starting with [regulator] 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." | "More must be done to put consumers firmly in control of their borrowing, starting with [regulator] 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." |
| In July, another regulator, the Financial Conduct Authority, proposed putting a price cap on new payday loans from January 2015. | In July, another regulator, the Financial Conduct Authority, proposed putting a price cap on new payday loans from January 2015. |
| The FCA said that interest and fees should not exceed 0.8% per day of the amount borrowed; that fixed default fees should not exceed £15; and the overall cost of a payday loan should never exceed 100% of the amount borrowed. | The FCA said that interest and fees should not exceed 0.8% per day of the amount borrowed; that fixed default fees should not exceed £15; and the overall cost of a payday loan should never exceed 100% of the amount borrowed. |