A consultation response to the provisional findings report of the Competition and Markets Authority (CMA) regarding its investigation into the payday lending market. The CMA concluded that lack of competition in the payday market caused consumer detriment. It estimated that payday loan customers would save between £30 and £60 per year if competition worked better. The CMA’s report recommended that an independent price comparison website should be set up for the payday lending industry.
We welcome the work of the CMA and the fact that it is designed to inform and complement the regulation of the Financial Conduct Authority (FCA); the consumer detriment caused by payday lending goes beyond a competition issue. We are also broadly supportive of the CMA’s proposed remedies, including the establishment of a price comparison website and the focus on improving payday customers’ awareness of fees and charges related to loans that they fail to pay back in full and on time. However, we maintain that the evidence of the CMA reinforces the need for further action from the regulators related to two areas of the payday market: lead generators and customers borrowing from multiple lenders.