DISHONEST pay loan firms seem to be smashing the new competition rules made to protect vulnerable customers, a new investigation finds.
The new regulations for pay day loan firms arrived to force in May because of an investigation through the Competitions and Markets Authority (CMA).
Under the brand new rules, online lenders are required to advertise on at least one price comparison website to help borrowers get the best deal.
A “prominent" link to a price comparison website must also be displayed on their platform.
The CMA said the guidelines would provide borrowers with a clearer understanding of fees and charges, making it simpler to determine the cost of missing repayments.
But a study by consumer website MoneySavingExpert, which checked out 50 pay day loan firms, found some were flouting the guidelines.
Some ten payday firms did not have the symptoms of any link to a price comparison website on their homepage within the first week of June, while an additional ten did not appear to have a link displayed “prominently” online.
Guy Anker, managing editor of MoneySavingExpert.com, said a worrying proportion of lenders seem to be operating with scant regard for that new rules.
“It's remember this these aren't merely optional guidelines or nice-to-have recommendations. The CMA must take prompt and decisive action to crack down on those who still aren't doing what they're designed to," he explained.
In response to the investigation, a spokesperson from the CMA asserted all payday lenders are actually legally obliged to adhere to these requirements.
"We are able to take further enforcement action which previously has included issuing detailed directions to companies and ultimately we are able to go to court – albeit like a last resort given the time and expense involved when obtaining compliance by other methods is quicker," a for the CMA spokesperson told MSE.
Despite the significant crackdown on payday lenders, there's been a “striking” surge in complaints about credit, including payday loans, in the last year.
The Financial Ombudsman Service (FOS) recently said it had received 10,529 complaints about payday loans over the past year, three times the total amount in 2023-16, when there have been 3,216.
In total, there have been 25,984 complaints about credit services and products between 2023-17, in contrast to 13,713 the previous year.
Caroline Wayman, chief executive and chief ombudsman of the FOS said: “The most striking story this season has been the increase in complaints we have seen from people having trouble with credit.
“It's clear that financial difficulties and financial exclusion remain significant challenges for most people.
“The important thing would be to speak up if you're struggling."