Regulator intervenes to boost price competition amongst payday loan firms
Payday loan firms face being forced to publish their product details on at least one price comparison websites following an intervention by an industry regulator aimed at reducing borrowing costs and fees.
The Competition and Markets Authority (CMA) is reportedly ready to mandate the shake-up following a 20 month investigation into anti-competitive practices but concedes that there is currently no price comparison website available to perform this task.
As things stand comparison sites must be approved by the Financial Conduct Authority before they can carry payday loans, meaning that the regulator may be forced to set up its own platform for the task of a solution cannot be found.
Simon Polito, chair of the CMA’s payday lending investigation group, said: "... we are requiring lenders to be listed on price comparison websites authorised by the FCA and have recommended to the FCA that these websites should carry all the information customers need to compare easily the total cost of different lenders’ loans. 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.
"We have worked closely with the FCA throughout the investigation and are pleased that the FCA is fully supportive of the remedies in our final report."
In the meantime an additional round of consultations will be conducted before the ruling is implemented.