CMA Publishes Final Order On Payday Lending
The Competition and Markets Authority (CMA) last week published the Payday Lending Market Investigation Order, which gives the final requirements for lenders supplying payday loans. The CMA published its final report in February into the payday lending market. The report highlighted features of the payday lending market, which they felt adversely affect competition and they decided on a package of remedies to mitigate the effect on competition.
The Order gives effect to some of the remedies highlighted in February. These include:
- The Financial Conduct Authority sets up additional standards for payday loan price comparison websites. These sites should provide clear, objective and comparable information on all potential loan costs, in particular the total amount payable. They should also allow comparison of different types of loans by searching easily on the most relevant features such as loan amount and duration.
- Lead generators must be more transparent to customers about how they operate.
- Payday lenders must provide existing customers with a summary of their cost of borrowing that will tell borrowers the total cost of their most recent loan, as well as the cumulative cost of their borrowing with that lender over the previous 12 months highlighting how any late repayment charges affected their cost of borrowing.
- Payday lenders must improve the disclosure of late fees and other additional charges
- Improve real-time data sharing between lenders and credit reference agencies
The CMA expects that the implementation of this order and the FCA’s ongoing work in the sector will increase competition within the market to the benefit of borrowers.
The CMA press release can be found here https://www.gov.uk/government/news/cma-publishes-payday-lending-final-order