The Competition and Markets Authority (CMA) have announced that payday and instalment lenders need to make their financial products available on at least one comparison website to increase competition and clearer understanding of their products.
Findings of The CMA’s Investigation
The CMA found after much investigation that consumers are not looking around for the best deals and are just accepting loan products from first lenders they find and not getting the best financial deal. The CMA have also said that lenders need to be transparent showing all costs involved with a detailed summary.
The announcement by the CMA has come after an investigation taking almost two years to rebuild the short term loan market which has been marred with controversy over the last few years. Simon Polito who is in charge of reforming the payday loan market said “Our actions are aimed at making the market more competitive and further driving down costs for borrowers,”
Further Proposals By The CMA
Here is a breakdown of the CMA’s additional proposals –
- clear and detailed understanding of late fees and charges
- ways to help consumers look around for the best deals without affecting their credit history
- expand further on data sharing services to help payday lenders make a more detailed analysis of credit risks more accurately
- that websites selling potential borrowers’ details to lenders should explain their role much more clearly.
The recommendations set out by the CMA have come after announcing last year to cap the payday loan industry at not charging more than 0.8% per day on any amount borrowed which came into force in January with no-one having to ever having to back more than double the loan amount borrowed.