Payday Loans Lack Competition

Payday Loans Lack Competition.

An investigation from the Competition and Markets Authority (CMA) has found that the market for payday loans lacks competition, meaning that consumers could be paying too much for their loans.

The findings found that this could result in a £30 - £60 addition on a year’s bill. Over a period of 3 weeks £5 - £10 could be added to the price the loan.

If the market were more competitive we could see lenders trying to beat each other and as a result the prices of payday loans could drop.

Recent years have seen the market for payday loans increase in size with more and more people using these services to gain access to quick cash. Over the last year the payday lender market has seen an overhaul with the Financial Conduct Authority (FCA) introducing tighter rules to the market.

The new rules will see the consumer more protected when taking one of these quick loans, such as a restriction on ways the lender can go about trying to reclaim debt and tougher lending checks.