The Competition and Markets Authority (CMA) is to require payday lenders to be listed on price comparison websites authorised by the FCA.
The independent body has also recommended to the FCA that these websites should carry all the information customers need to compare easily the total cost of different lenders’ loans. It argues this will promote competition and provide the incentive for new and existing lenders to compete to offer lower cost loans and win borrowers’ business. It will also make it easier for new entrants that offer lower cost loans to access customers.
This follows a 20-month investigation into the payday lending market by the CMA.
The CMA has also made recommendations to the FCA to take steps to improve the disclosure of late fees and other additional charges and help customers to shop around without unduly affecting their ability to access credit.
It also recommended that there be an improvement in real-time data sharing between lenders and credit reference agencies and suggests ways to ensure that lead generators – websites which sell potential borrowers’ details to lenders and through which 40% of first-time online borrowers access their loans – explain how they operate much more clearly to customers.
Finally, online and high street payday lenders will be ordered by the CMA to provide existing customers with a summary of their cost of borrowing. The summary will tell borrowers what the total cost of their most recent loan was, as well as the cumulative cost of their borrowing with that lender over the previous 12 months and how late repayment affected their cost of borrowing.