The Competition and Markets Authority has proposed that payday lenders make their prices and costs more transparent so as to create greater competition in the sector.
Simon Polito, chair of the CMA’s Payday Lending investigation group, has said:
“Greater price competition will make a real difference to the 1.8 million payday customers in the UK. At the moment there is little transparency on the cost of loans and partly as a result, borrowers don’t generally shop around and competition on price is weak.”
Their proposals also include allowing borrowers to research their options without damaging their credit records and giving borrowers access to information on how much they have paid on their latest loan.
The FCA have already suggested that fixed default fees should not exceed £15 and the overall cost of a payday loan should never exceed 100% of the total loan amount.
Richard Lloyd, of consumer association Which? thinks the recommendations should only be the beginning of a reform:
“More must be done to put consumers firmly in control of their borrowing, starting with [regulator] the Financial Conduct Authority looking at the whole of the credit market and cracking down on excessive fees across all forms of credit, including unauthorised overdrafts.”