‘Good news for millions of borrowers but information alone will not be the answer’ – Which? response to the Competition and Markets Authority’s payday loan proposals

Which? executive director, Richard Lloyd, said:

“These proposals, alongside other reforms to the payday market,  will be good news for millions of borrowers but information alone will not be the answer to the bad practices found across the credit market.

“More must be done to put consumers firmly in control of their borrowing, starting with the Financial Conduct Authority looking at the whole of the credit market and cracking down on excessive fees across all forms of credit, including unauthorised overdrafts.”


In Credit Britain 2, our most recent report on the credit market, we found:

  • Around 2.5 million people, approximately the same number as those that have used a payday loan, say they have used an unauthorised overdraft in the last 12 months.
  • More than two thirds (68%) of unauthorised overdraft users say the fees and charges are too high or unfair and around a third (36%) have been surprised by the amount they were charged.
  • Eight in ten (79%) people used a credit product last year
  • A significant proportion (21%) of people who have used a credit product in the last year, say they run out of money by the end of every month, a rise of two percentage points since 2012.
  • UK consumers’ total unsecured debt remains considerable at £158 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

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