Payday loan firms are facing a fresh clampdown with the stipulation of new regulations mandating that all businesses operating in the sector must advertise on a minimum of one price comparison website.
Authored by the Competitions and Markets Authority the new rules include a requirement for all lenders to include a ‘prominent’ link to a price comparison platform in order to allow customers to more readily compare terms on their loans with other providers.
The CMA believes that such a requirement will also provide borrowers with a clearer understanding of fees and charges to hammer home the true cost of missing a payment as well as opening up the sector to new lenders willing to compete with established players and drive down costs.
Payday loan firms have unsurprisingly reacted negatively to the clampdown, warning that a price cap has already resulted in 600,000 fewer customers able to access credit, with the total number of loans approved since 2013 falling by 42%.
Despite their protestations providers have no choice but to comply however, with Wonga having already signed up with price comparison site Choose Wisely to meet its obligations.
Google moved to ban 'harmful' payday loan ads last year having criticised the ethics of targeting individuals with poor credit history.