Time to turn the spotlight on the wider credit market

As the new payday rules come into effect today, Which? takes a look at the payday market and calls on the regulator to now turn the spotlight on the wider credit market.

Our snapshot research looked at the cost of borrowing £100 for 30 days from a payday lender two weeks before the price cap came into effect. We found:

  • Some payday lenders had already brought their charges in line with the price cap in advance of it being introduced. Wonga, QuickQuid, Payday UK and MyJar were charging £24 in interest to borrow £100 for 30 days, with default fees charged at £15 which is the maximum they would be allowed to charge under the cap.

  • WageDayAdvance, The Money Shop, Safe Loans, Peachy,Quid 24 and 247Moneybox were charging more than would be allowed under the new rules. 247Moneybox had the highest charges, with borrowers paying £39.00 interest on £100 if the loan was repaid on time.

  • 247 Moneybox also had the highest charges on late payments, with borrowers incurring a minimum of £98 in interest and charges on top of a £100 loan that was repaid 30 days late. Under the new price cap, the most that could be charged is £66.60, which includes a default fee of £15, plus £51.60 in interest.

  • London Mutual Credit Union was the only lender we looked at that charged less than the maximum allowed under the cap, with borrowers having to pay back just £3 in interest on £100 and did not charge default fees.

  • A general lack of transparency in the ways fees were presented made it difficult for Which? researchers to accurately estimate the potential impact of defaults. Particular problems were experienced with Peachy, Safe Loans, Swift Money, The Money Shop and Quid 24 websites, where we were unable to work out how much someone would be charged if they repaid a £100 loan 30 days late.

Since our previous research into payday lenders charging excessive fees in January 2014, five of the lenders we looked at are either no longer trading or no longer offering payday loans. These are Microlend, MiniCredit, MyMate, Speedy Dosh and Zebit.

Which? executive director, Richard Lloyd, said:

“Today’s crackdown on the payday lending market comes not a moment too soon. Lenders must now start competing on price and treating their customers fairly.

“The regulator has clearly shown it’s prepared to take tough action to stamp out unscrupulous practices, and they must keep the new price cap under close review. It’s now time to turn the spotlight on unfair practices in the wider credit market.

“We want to see an end to excessive fees that also make it hard to compare different loans, including those charged for unauthorised overdrafts and credit cards.”


1. Our snapshot research of payday lenders to see the fees they were charging before the cap came into effect was carried out on 19th and 22nd December.

Payday lender

Cost for £100 over 30 days

Cost if payment is 30 days late*

London Mutual Credit Union (BACS payment – up to 3 working days)



London Mutual Credit Union (same day payment)
























MoneyShop.tv (NB highstreet lender, not online)


Charges not made clear on the website



Charges not made clear on the website



Charges not made clear on the website



Charges not made clear on the website





Charges not made clear on the website

Charges not made clear on the website

*does not include further charges, including interest on the default sum, which may be added by some lenders

2. The latest findings from the Which? Consumer Insight Tracker reveal:

  • In 2014, each month an average of 880,000 households took out a payday loan. [December 2014]

  • The latest Bank of England data [October 2014] shows that UK consumers’ total unsecured debt has risen to £168 billion.

We also identified further action for the Financial Conduct Authority:

  • Ensure lenders provide clear, transparent, easily comparable information

  • Put borrowers in control of their credit

  • Crack down on irresponsible lending – including withholding or withdrawing authorisation for firms that are found to have business models that rely on irresponsible lending or customers defaulting

  • Ban excessive default fees and charges

  • Swift, early and effective intervention for people in financial difficulty

We campaigned on this issue via our Clean up Credit campaign, find more information here: www.which.co.uk/cleanupcredit

The latest data from the Which? Consumer Insight Squeezometer shows that more than a million households (4%) are using unauthorised overdrafts or payday loans.


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