CMA Review of Payday Lending Market
After a 20 month investigation in to the payday loan market, the Competitions & Market Authority have come back with a number of key recommendations including the chance to shop around!
The CMA has formalised its findings into the payday loan market. This has been a 20 month investigation. The CMA identified a number of problems with the payday market including a lack of price competition between lenders and a lack of clarity on hidden costs and fees. There was also confusion from borrowers over the role of lead generators and the money they make.
In publishing their report the CMA consulted with consumer groups, debt charities, and lenders.
Online pay lenders will now be required to publish details of their products on at least one price comparison website. In addition these websites must ensure that customers are fully aware of all costs associated with the loan and be very clear as to the total amount they will in the end payback on the loan.
The Key CMA Recommendations
All fees including late charges must be made available to borrowers
Customers should be encouraged to shop around
Improve the data sharing between lenders and credit reference agencies
Websites which sell borrowers details to lenders must explain how they operate to borrowers
Payday lenders will now need to ensure that they provide customers with a summary of the cost of their borrowing including what the total pay back will be on the loan and how any late payment has affected the overall loan.
Whilst these recommendations all sound well and good, it still remains to be seen whether the payday market will adhere and self police pre-legal necessity.