In October, the Competition and Markets Authority (CMA) published the proposed remedies it had provisionally decided to introduce in the payday lending market to increase price competition between payday lenders and help borrowers get a better deal.
One of the measures was to encourage the development of a high quality price comparison sector for payday loans. As a condition of participation in the market, payday lenders would be required to provide details of their products on accredited price comparison websites (PCWs) that would allow people to make quick and accurate comparisons between loans.
Following further consultation with the Financial Conduct Authority (FCA) and other parties, the CMA is seeking views on an adjusted remedy proposal.
The adjusted proposal reflects that rather than have a separate accreditation scheme, the FCA would include PCWs in its existing authorisation scheme for credit brokers, which would include PCWs offering payday loans.
Payday lenders operating online would still be obliged to show their products on at least one PCW that satisfies the necessary criteria, which include ranking loans by total amount repayable, clear information on all potential loan costs and the ability for customers to search easily on the most relevant features such as loan amount and repayment terms. These criteria would now be included within the FCA’s authorisation standards rather than as part of a separate accreditation scheme.
The CMA is also seeking views and evidence relating to a possible change to our proposed remedy suggested by one party, that all lenders must provide customers with a summary of the cost of borrowing – the change relates to the period of time that the summary should cover.
The full consultation document is available on the investigation case page along with all other information on the investigation.
The CMA expects to publish its final report on payday lending, which will include the finalised remedies, in February 2015.