Financial Conduct Authority used to be the key watchdog over the growing payday loan industry in the UK. The FCA now has decided to bring in some more help in the form of the Competition Commission. This body oversees how competition in business operates in the UK. Let’s look at some of the reasons why the FCA has decided to bring in the muscle of the Competition Commission.
Top reasons why payday lending is being looked at more
- Speed: Watchdogs want to manage at the availability of loans for consumers because there is a train of thought that lenders are competing based on how fast the loan can be approved, rather than the cost of the loan. Speed is what the Commission will be investigating to see whether it is benefiting consumers.
- Lack of comparison: The Commission wants to look into whether consumers are being able to compare the cost of payday loans. Just like how insurance has a large comparison industry where you can see the different prices of car insurance, comparison needs to be more transparent in the payday loan industry too. Peachy Loans is committed to highlighting the importance of this in the industry as well.
- Affordability of loans: The Commission wants to find out whether loans are affordable for payday loan consumers especially due to the campaigning of activists about how expensive some lenders are making their loans.
- Difficulty in switching lenders: Switching lenders is said to be difficult for some customers who go to other lenders. This makes it harder for lenders to win business between each other.
- More compliance: The Commission thinks that there needs to be a standard level of compliance between all of the lenders in terms of the guidelines for marketing payday loans. This is to encourage more responsible lending between lenders for consumers.
We are passionate about responsible lending which is why we welcome the Competition Commission’s thoughts on what to look at more. We think that the Commission should make the market more competitive but we also believe that delivering excellent customer service is really important for our borrowers. Clive Maxwell, the chief executive of the OFT, said that the Commission can now work on fixing the payday lending market with its powers. We await to see what the Commission wants to do next for payday lending.