The Competition and Markets Authority has published a draft Order as part of its current market investigation into payday lending and is seeking views from interested parties by 1 June 2015.
The draft Order:
- prohibits the supply of payday lending unless the lender has published information on an FCA authorised price comparison website;
- prohibits the supply of payday loans unless customers are provided with a summary of the cost of borrowing; and
- contains an obligation on payday loan providers to produce compliance reports and submit them to the CMA.
Following consultation with the wider lending industry the definition of a payday loan has been more tightly defined as follows:
Payday loan means any unsecured loan with an APR equal to or greater than 100% taken out for 12 months or less and where the amount borrowed is less than £1,000 (excluding home credit loan agreements, credit cards, store cards, credit unions and overdrafts).
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