New Rules Force Payday Lenders to Advertise on Price Comparison Websites
May 26, 2017
New rules have come into force that require payday lenders to advertise their offers to customers via at least one price comparison website.
The regulatory rule changes are designed to protect consumers by improving standards of competition within the payday lending industry.
As of May 26th, payday lenders must display a link to a price comparison website in a prominent position on their website so that potential customers can make sure that they’re getting a competitive deal.
The new rules have been brought in as a response to the findings of an investigation by the Competition and Markets Authority (CMA), which established that there is often a big difference between the most and least expensive forms of payday loan deal available.
Payday loans have become a major source of problem debt for thousands of people across the UK in recent years and regulators have been working to find new ways to reduce the damage that these forms of short-term lending can potentially do to an individual consumer’s personal finances.
In early 2015, the Financial Conduct Authority (FCA), which regulates the UK’s financial industry, introduced rules which limited the scale of interest charges and fees that payday lenders can levy against their customers.
The FCA has also issued fines against a number of different payday loan companies in recent years for what it concluded were unfair or unethical practices.
Payday loan companies have also been banned from placing advertisements in various contexts as part of an effort to better protect customers from the potential problems their high interest loans can bring about.
Hopes are that obliging these companies to link to price comparison websites will give consumers a clearer picture of what fees and charges are involved in a given payday loan offer and a better idea of which offers represent the best value in a particular set of circumstances.
Rules introduced in 2015 mean that payday lenders can now charge their customers no more than 0.8 per cent of an amount borrowed per day and no more than 100 per cent of a loan amount borrowed in total as charges or fees.
Nonetheless, payday loans remain a common source of serious financial problems for consumers across the UK.
If you live anywhere in Scotland and are struggling to cope with you debt problems then Scotland Debt Solutions can help. Contact any of our offices to arrange a free and confidential consultation.