The Competition and Markets Authority (CMA) has published its provisional findings on its investigation into the supply of payday lending in the UK.
The CMA has so far found that the absence of price competition could be adding £5 to £10 to the average cost of a payday loan, relative to a typical loan of £260 taken out for just over 3 weeks. The CMA has also found that the market wide impact of greater competition could be substantial. The CMA’s indicative estimates suggest that total savings for UK customers from greater competition could be more than £45 million a year, relative to total revenue earned by payday lenders of around £1.1 billion.
The CMA will now be looking at ways to increase price competition, including the establishment of an independent price comparison website, clearer upfront disclosure of borrowing costs if a loan is not paid back in full and on time, as well as requiring greater transparency about the role played by lead generators.
The CMA invites comments on the provisional findings, proposed remedies and proposed variation of the terms of reference by 4 July 2014.
View Payday borrowers paying the price for lack of competition, 11 June 2014
View Payday lending market investigation: summary of provisional findings report, 11 June 2014