FCA toughens rules on payday loan comparison sites

In February 2015, the CMA proposed six remedies to improve competition in the payday lending market, following the introduction of a price cap for high-cost short-term credit by the FCA last year.

The CMA recommended that the FCA review its standards for price comparison websites which display payday loans, before a CMA Order requiring all payday lenders to list their products on at least one price comparison website comes into effect.

The proposals include requiring price comparison websites to:

- rank products in ascending order of price according to the Total Amount Payable and not give products greater prominence as a result of commercial relationships
- ensure any additional advertising on PCWs for HCSTC is outside the ranking tables and not interspersed with it
- enable consumers to search according to the amount and duration of loan that they require
- disclose on their website the extent of their market coverage by listing the number and names of the firms whose products they compare.

The consultation paper also addresses a number of other areas, including the use of real-time data sharing to enable informed credit assessments, measures to improve shopping around without affecting consumers’ credit ratings, improved disclosure on the costs of borrowing, and credit broking/lead generation.

Christopher Woolard, director of strategy and competition at the FCA, said:

“We would like to see consumers benefit from greater competition and transparency in the high-cost short-term credit market, enabling them to make more informed choices and find the best value loan for their circumstances.”