Lending watchdog calls for pay-day loan comparison site to increase competition and transparency
A UK market watchdog has announced its intent to launch a pay-day loan price comparison site to increase the transparency of the industry for consumers, showing the real cost of the packages.
Wonga is among one of the UK's leading lenders
The Competition and Markets Authority (CMA) on Thursday proposed the site, which would see major lenders rates laid out full for consumers, according to Reuters.
The CMA site could increase competition in the UK industry, which sees over 1.8 million customers a year, dropping rates below the cap imposed by the Financial Conduct Authority (FCA) in July.
The site would help borrowers make informed decisions on which short-term package would best suit them amid criticism that the firms harm consumers with unclear, and high, loan repayments.
Disclosed with the proposal was the idea that pay-day loan companies would also have to disclose the costs of late payment up front.
The watchdog is currently in talks with major price comparison sites about the addition of the pay lenders. The lenders have until the end of the year to sign up for the new service.
On Wednesday, Wonga was forced to remove a TV ad by the Advertising Standards Agency for failing to mention the annual interest on the loans.