The UK’s Financial Conduct Authority announced Tuesday that it is considering implementing new, strict price caps on payday loan companies in a move that, while aiming to protect consumers, could actually harm competition.
Reports say authorities may impose lending cap costs at .08 percent a day and 100 percent overall, meaning consumers would never pay more than double what they initially borrowed. The rules would go into effect in January after the FCA launched an investigation into the payday loan industry.
The regulator acknowledged that these new caps could cause smaller lenders to exit the market, and some have raised concerns that it would harm competition. But the FCA addressed those concerns, noting that its “analysis is that for online firms, we do not expect the [new rules]…to reduce competition, given that price competition is already limited. More firms does not necessarily equate to better quality products.”
The FCA added that its analysis aligns with that of the Competition and Market Authority’s, as both watchdogs found “that a small number of firms have a high market share without evidence of smaller firms exerting price pressure on them,”
Full content: City AM
Want more news? Subscribe to CPI’s free daily newsletter for more headlines and updates on antitrust developments around the world.
Featured News
Google and South Carolina Clash Over State Records Demand
May 8, 2024 by
CPI
Telefonica Germany Teams Up with Amazon Web Services to Migrate 5G Customers
May 8, 2024 by
CPI
Federal Judge Grants $7.4 Million Settlement in Pork Price-Fixing Case
May 8, 2024 by
CPI
Wilson Sonsini Bolsters Antitrust and Competition Practice with Key Partner Returns
May 8, 2024 by
CPI
EU to Scrutinize Telecom Italia’s Network Sale to KKR
May 8, 2024 by
CPI
Antitrust Mix by CPI
Antitrust Chronicle® – Economics of Criminal Antitrust
Apr 19, 2024 by
CPI
Navigating Economic Expert Work in Criminal Antitrust Litigation
Apr 19, 2024 by
CPI
The Increased Importance of Economics in Cartel Cases
Apr 19, 2024 by
CPI
A Law and Economics Analysis of the Antitrust Treatment of Physician Collective Price Agreements
Apr 19, 2024 by
CPI
Information Exchange In Criminal Antitrust Cases: How Economic Testimony Can Tip The Scales
Apr 19, 2024 by
CPI