Russell Hamblin-Boone, Chief Executive of the Consumer Finance Association, which represents some of the best known short-term lenders said:
“This is the most authoritative and accurate analysis of the market we have seen and it clearly shows that short term loans are a vital financial lifeline for many people. The CMA’s proposed remedies combine well with the regulatory measures that lenders are putting in place as they protect choice, promote competition and make it tougher for rogue lenders and lead generators to exploit.
“However, over regulation is a major risk here. The Financial Conduct Authority is designing a price control which, when implemented on top of other regulations, may actually restrict borrowers’ options. Major lenders are already leaving the market leaving consumers with less choice, not more.”
On the proposal for a price comparison website:
“Any measure that helps consumers to make the best possible financial decisions whilst protecting choice and encouraging competition is something to support.”
On the finding that borrowers are overpaying by around £5 to £10 per loan:
“This industry has been scrutinised and demonised to such an extent that even price promotions have been criticised. However new regulations are now in place and the Financial Conduct Authority is currently designing a price control which should address any imbalance in pricing identified by the CMA. . The risk, however, is that the cap will make payday loans commercially unviable.
“Lending is down 50% in the last 3 months, leaving consumers with less choice of regulated lenders, not more. This demand for credit will then be met by illegal lenders – either those operating with baseball bats or more likely those that operate offshore, out of the regulator’s reach.”