Consumer Council and NICVA welcome CMA final report on payday lending market investigation
The Consumer Council and NICVA have welcomed the release of the final report of the CMA’s payday lending market investigation. The findings highlight a worrying lack of competition in the payday loan market and confirm the difficulties consumers face in comparing and choosing payday loan products.
Rachael Cray, Head of Money Affairs at the Consumer Council said: “Payday lending has significant effects on the most vulnerable consumers. The results of the investigation show that there continues to be a lack of clarity around how costs are calculated. This prevents consumers from easily comparing the price of different loan providers.
“The findings also reiterate the need for greater protection for consumers. The Consumer Council has previously called for greater transparency on the overall costs of payday loans, as well as clearer information on fees and charges incurred in the event a loan is not paid back on time.
“We are, therefore, pleased that the CMA has taken an action to order payday lenders to appear on at least one Price Comparison Website. This should allow consumers to choose a product best suited to their needs. It also means that total costs and charges should be clear and comparable. This is a positive move for consumers alongside the price cap introduced by the FCA in January.
“However, not all issues with the payday lending market have been addressed and we fully agree with the recommendations the CMA have made to the FCA to improve the disclosure of fees and improve real-time data sharing.
“Consumer Council research shows that almost fifty percent of us have run out of money at least once in the last two years. Some consumers may resort to payday lending as a quick fix solution despite it still being an expensive way to borrow. We want to see more affordable credit options becoming available for consumers, to prevent them from having to resort to high-cost short-term credit, which can often have long-lasting consequences on finances.”
Seamus McAleavey, Chief Executive at NICVA said, “We welcome the recommendations made by Competition and Markets Authority. We know that many people are struggling to make ends meet and need quick access to credit to meet unmanageable or unplanned expenses. Improving the information available to help them make a more informed decision is a step forward. However, taking out payday or other loans forces people further into debt, that is why we are working with a range of agencies to explore how we could develop an accessible credit scheme in Northern Ireland.”
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