In its final report on the payday lending market, the body advised the Financial Conduct Authority (FCA) that price comparison websites should provide customers with comparable information on all potential loan costs.
Setting out its recommendations, the CMA said comparison websites should pay particular attention to enabling customers to compare the total amount payable on loan costs and give consumers the option to compare different loans by searching for features such as loan amount and duration.
If no commercial price comparison websites choose to include payday loan products on their sites then lenders will be forced to set up an FCA authorised website for consumers.
A spokesman from the CMA said: “It will be up to them [price comparison websites] if they want to carry details of payday lenders. We’ve spoken to most of the PCWs and a couple have sounded not so keen and some have been more positive.
“So it’s likely that at least one of them will do so but the obligation will be with the lenders to supply their details rather than with the price comparison websites.”
He added that the process would include a non-discrimination clause which would prevent PCWs from “unreasonably” excluding lenders to ensure the process was as “objective and neutral as possible”.
Further recommendations include:
• improving the disclosure of late fees and other additional charges
• helping customers to shop around without unduly affecting their ability to access credit
• improving real-time data sharing between lenders and credit reference agencies
• ensure that lead generators – websites which sell potential borrowers’ details to lenders and through which 40% of first-time online borrowers access their loans – explain how they operate much more clearly to customers
Simon Polito, chair of the CMA’s Payday Lending Investigation Group said the FCA was “fully supportive” of the remedies in its final report.
“We expect that millions of customers will continue to rely on payday loans. The FCA’s price cap will reduce the overall level of prices and the scale of the price differentials but we want to ensure more competition so that the cap does not simply become the benchmark price set by lenders for payday loans.
“We think costs can be driven lower and want to ensure that customers are able to take advantage of price competition to further reduce the cost of their loans. Only price competition will incentivise lenders to reduce the cost borrowers pay for their loans,” he concluded.
The CMA plans to publish an order within six months putting in place its requirements relating to price comparison websites and borrowing summaries. The FCA consult in the summer of 2015 on the proposed measures.
