"Payday loans industry to face competition inquiry"

From the BBC:

The British Bankers' Association (BBA) has referred its members to the Competition Commission because of concerns about "deep-rooted problems with the way competition works".

The BBA said it found that customers found it difficult to identify or compare the full cost of loans and mortgages. It added that there were barriers to switching between lenders when loans were "rolled over".

'Unaffordable' loans

But the lenders involved said they are already changing their practices. The BBA said it was also concerned that competition was based on speed rather than cost.

"The competitive pressure to approve loans quickly may give firms an incentive to skimp on the affordability assessment which is designed to prevent irresponsible lending and protect consumers," the BBA said in a statement.

'Affordable' mortgages

The BBA also said that some of the business models of companies operating in the payday loans industry were causing concern, because they were "predicated on making loans which are unaffordable, leading to borrowers paying far more than expected through rollovers, additional interest and other charges".