The Competition and Markets Authority (CMA) has said today that payday lenders must improve the clarity of their products and actively help borrowers compare them with other lenders.
Citizens Advice Scotland’s Debt spokesman Fraser Sutherland says,
“These latest changes regarding fair and clear pricing come on the back of the interest cap by city regulator, the FCA, and robust action in unfair cases by the Financial Ombudsman. Following years of campaigning by CAS and others to highlight the problems in the lending industry, there is a clear trend of tightening regulation to protect borrowers from the worst excesses. This is of course to be welcomed.
“However, these changes by no means makes payday loans a safe option overnight. Today’s report also finds that most borrowers don’t shop around for the cheapest loan but continue instead to just use the most high-profile payday lenders - which still tend to be one of the most expensive options. Most people would find better deals elsewhere, such as with their local credit union or social enterprise lender.
“So any price comparison site must be able to provide a picture of the whole market and not just refer on to the company willing to pay the biggest commission, as some shockingly bad brokers currently do.
"We would encourage anyone struggling with their finances and already in significant debt to not fall into the trap of poor value borrowing as our evidence of thousands of clients shows it only makes the situation worse. The CAB service is here to provide free, confidential and non-judgemental support and debt advice and our advisors can help you on the way to a steadier financial future."
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