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Payday lenders to have to share deals on comparison sites

Online payday lenders will be ordered to publish details of their products on at least one price comparison website under plans by the competition watchdog to make it easier for borrowers to shop around.

Payday lenders will have to share deals on comparison sites Credit: Rui Vieira/PA Wire

The Competition and Markets Authority (CMA) has made the finding following a investigation, lasting nearly two years, into the payday lending market, which found that a lack of price competition between lenders has led to higher costs for borrowers.

It found that most borrowers do not shop around, partly because of the difficulties in accessing clear and comparable information on the cost of borrowing and a lack of awareness of late fees and additional charges.

Regulator steps in to curb hidden payday loan broker fees

The Financial Conduct Authority has stepped in with emergency action to curtail hidden brokerage fees levied on customers by payday lenders.

The new rules mean brokers can no longer raid the bank accounts of customers with fees they did not expect. It follows complaints to banks from customers who do not understand the various fees they have been charged.

The Financial Conduct Authority has stepped in to take action against broker fees. Credit: Press Association

The FCA has uncovered evidence that brokers, as well as charging additional fees that were not properly explained, are then sharing the account details of those getting the loan with up to other companies, who also attempt to charge a fee.

The FCA has also received relevant intelligence from consumer groups and others who are seeing increasing complaints from people who have had money taken from their accounts unexpectedly and often by more than one broker.


In an unusual step for the FCA - who normally work in consultation with the firms - seven firms have been stopped from taking on new business and three further cases have been referred for enforcement action. The new rules come into force on January 2 next year. Martin Wheatley, chief executive of the Financial Conduct Authority said:

The fact that we have had to take these measures does not paint this market in a particularly good light. I hope that other firms will take note that where we see evidence of customers being treated in a blatantly unfair way, we will move quickly to protect consumers from further harm.

– Martin Wheatley


Report calls to restrict payday loan adverts

Almost three quarters (74%) of parents want payday loan companies to be banned from broadcasting television and radio adverts before the 9pm watershed, according to a new study.

Report calls to restrict payday loan adverts Credit: PA

The research found that over one third (34%) of children find the adverts to be fun, tempting or exciting, and this group were significantly more likely to say they would consider using a payday loan in the future.

The statistics form part of a report by The Children's Society which calls for restrictions on loan advertising to join those already in place to protect children from adverts for gambling, alcohol, tobacco and junk food.

FCA reveals financial hardship of average loan users

Prior to announcing proposals for a new cap on the costs of taking out loans from payday lenders, the FCA conducted a survey of 2,000 representative customers.

The results identify the level of financial difficulties those borrowing endure.

FCA is proposing an initial cost cap of 0.8 per cent per day of the amount borrowed for new loans or loans rolled over. Credit: FCA
Currently 1.6 million people in the UK take out 10 million loans valued at a total £2.5 billion. Credit: FCA

Crackdown on payday loan costs will hurt 'many people'

The head of the Consumer Finance Association, which represents the industry, has urged people to consider the full consequences of a crackdown on the high costs and charges enforced by payday lenders.

Anyone who thinks that a price cap is good news for borrowers should have a thought for those many people who will be turned down for loans because the best lenders will have to reject those with the worst credit records.

We support a cap that allows the industry to operate profitably with the right protection in place for vulnerable people. With new regulations and tighter affordability checks, critics must now face up to the fact that most people use, need and like short-term credit and the measures in place are more stringent than for any other form of consumer credit.

– Russell Hamblin Boone, chief executive of the Consumer Finance Association
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