Corporate report

Payday lending

Published 25 November 2016

© Crown copyright 2016

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Recommendation to regulator Response
1. Financial Conduct Authority (FCA) to take steps to improve the disclosure of late fees and other additional charges. FCA considers existing rules sufficient. Issues of disclosure to be addressed by the authorisation process, its review of high-cost short-term credit (HCSTC) (conducted in parallel with our market investigation) and subsequent enforcement as necessary.
2. FCA to work with lenders and other market participants to help customers shop around without unduly affecting their ability to access credit. No specific regulatory action, based on testing of disclosures with consumers. Some work in engaging with the Information Commissioner’s Office on data issues. Ongoing engagement with lenders and credit reference agencies (CRAs) on promoting a market-driven solution.
3. FCA to take further steps to promote real-time data sharing (RTDS) between lenders and CRAs. 90% of loans by volume reported by RTDS; FCA to monitor progress to ensure there continue to be improvements in this area and come forward with rules if it detects any loss of momentum.
4. FCA to take steps to increase transparency around the role of lead generators. New rules introduced to ensure that lead generators (which act as credit brokers) must be explicit that they are not lenders.
5. FCA to introduce standards for payday loan price comparison websites (PCWs) through its existing legal framework. New rules on PCWs introduced via Order (PDF, 35KB).
6. FCA to give consideration as to how to encourage authorised payday loan PCWs to be open to all lenders to better facilitate comparisons. FCA has made a declaration that it would use its concurrent competition powers to act as appropriate.
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