LONDON, June 11 (Reuters) - Britain’s competition watchdog said payday loan customers may be paying too much for their loans due to a lack of price competition in the industry.
The Competition and Markets Authority (CMA) said on Wednesday it will look at ways to increase price competition, including the establishment of an independent price comparison website and clearer upfront disclosure of borrowing costs if a loan is not paid back in full and on time.
Britain’s financial regulator is already forcing the industry, which includes Wonga, QuickQuid, Lending Stream and many other lenders who give short-term loans, to make changes to better protect consumers.
The CMA said its provisional findings showed the absence of price competition could be adding 5 to 10 pounds to the average cost of a payday loan, relative to a typical loan of 260 pounds taken out for just over three weeks.
It said as customers take out around six loans a year on average, a typical customer could save between 30 and 60 pounds per year if the market were more competitive.
Reporting by Steve Slater, editing by Louise Heavens