This morning, the screw that is being slowly tightened on the payday loan industry was given another couple of swift turns.
The Competition and Markets Authority, the regulator that took over from the Office of Fair Trading and the Competition Commission, has announced proposals to force payday loan companies to be more transparent about how they charge for short term credit. It is demanding comparison websites so that people can compare rates and a mechanism that will tell recipients of loans exactly how much they are repaying - interest and other charges included. It also wants to see a crackdown on the murky world of "lead generators" - intermediaries that sell details of customers wanting a loan to the payday companies. Customers might believe these lead generators are shopping around for the best deal, when in fact they are often selling to the loan operator who will pay them the highest fee. The CMA's proposals, which will now be consulted on, are a sensible way to improve competition and transparency in the market. Letting the sun shine in is often the best disinfectant............Read more here