Published on 7 August 2013, as required by Rule 6 of the Competition Commission Rules of Procedure. Any revisions made to the timetable will be published on this website.
The Competition Commission has stated that it is expected that some market inquiries will be completed in a shorter time.
Phase 2
Date of referral: 27.06.13 Statutory deadline: 26.06.15
Contact
Email: paydaylending@cma.gsi.gov.uk
Core documents
Analysis
Working papers
Working Papers are published to invite comments and assist the Inquiry Group develop its thinking on key areas. They should not be considered as containing the Group’s definitive views. For further information see the CCs Guidelines for Market Investigations (PDF, 675 Kb), draft for public consultation, in particular paragraphs 56 and 57.
Evidence
Responses to Annotated Issues Statement and Working Papers
CC-commissioned research
Summaries of hearings held with parties
Responses to issues statement
Submissions
Announcements
News releases
Phase 1
Date of reference: 27 June 2013
Summary of work
On 6 March 2013, the OFT published a consultation document setting out its provisional decision to refer the payday lending market in the UK to the CC and opened a public consultation. The consultation document identified a number of features that the OFT suspected were - either individually or in combination - preventing, restricting or distorting competition in this market. The public consultation closed on 1 May 2013.
On 27 June 2013, the OFT announced its final decision to refer the market for payday lending in the UK to the Competition Commission (CC) for a market investigation. Having considered responses to the consultation, the OFT remained of the view that there were reasonable grounds for suspecting that features of the payday lending market were preventing, restricting or distorting competition.
The features identified by the OFT were:
Variability in compliance - the OFT Compliance Review found varying levels of non-compliance with relevant law and guidance by payday lenders. The OFT suspects that those firms which invest more time and effort in complying may be placed at a competitive disadvantage to those which invest less.
Lack of cost transparency - the OFT has identified practices which make it difficult for consumers to identify or compare the full cost of payday loans effectively at the point when loans are taken out. The OFT suspects that these practices undermine price competition by rendering consumers as a whole less effective at constraining prices.
Price insensitive customers - a significant proportion of payday borrowers have poor credit histories, limited access to other forms of credit and/or pressing needs. This may make them less price sensitive which, the OFT suspects, weakens price competition between payday lenders.
Barriers to switching - there are barriers to switching between payday lenders or to alternative products or options at the point of rollover. The OFT suspects that these barriers benefit incumbent lenders and prevent, restrict or distort competition from possible alternative lenders at the point of rollover.
Market concentration - the OFT suspects that high concentration and barriers to entry and expansion exacerbate the prevention, restriction or distortion of competition arising from the features identified above.
Action
The OFT, in exercise of its powers under Sections 131 of the Enterprise Act 2002 (the Act), referred the supply and of payday loans in the UK to the CC for investigation.
Key documents
Contacts
Team leader
Sue Aspinall
Senior responsible officer
Mary Starks
Media enquiries
Any media enquiries should be directed to a member of our Press Office.
Opened date:27 June 2013Updated at:17 April 2014
Case type:MarketsCase state:OpenMarket sector:Financial servicesOutcome:Markets - phase 1 referral
27 June 2013 | Reference made by the Office of Fair Trading |
July–September 2013 | Initial information requests, Initial submissions from main and third parties, Publication of initial issues statement |
September 2013 | Site visits, Issue questionnaires |
October 2013 | Hearings with third parties |
January 2014 | Publication of relevant working papers and annotated issues statement |
February/March 2014 | Main party hearings |
March 2014 | Deadline for all parties’ responses/submissions required before provisional findings |
May–June 2014 | Notify provisional findings and possible remedies (if required) |
November–December 2014 | Publish final report |
26 June 2015 | Statutory deadline |
Phase 2
Date of referral: 27.06.13 Statutory deadline: 26.06.15
Contact
Email: paydaylending@cma.gsi.gov.uk
Core documents
- Terms of reference (PDF, 50 Kb) 27.06.13
- Inquiry Group: Simon Polito (Chairman of the group), John Harley, Katherine Holmes, Ray King, Tim Tutton
- Disclosures of interest (PDF, 71 Kb)
- Administrative timetable (PDF, 37 Kb)
- Issues statement (PDF, 115 Kb) 14.08.13
- Annotated issues statement (PDF, 176 Kb) 31.01.14
Analysis
Working papers
Working Papers are published to invite comments and assist the Inquiry Group develop its thinking on key areas. They should not be considered as containing the Group’s definitive views. For further information see the CCs Guidelines for Market Investigations (PDF, 675 Kb), draft for public consultation, in particular paragraphs 56 and 57.
- Companies background working paper (PDF, 226 Kb) 31.01.14
- Competition between payday lenders and other credit providers working paper (PDF, 311 Kb) 31.01.14
- Annex 1 – Price comparison method 14.02.14
- Competition in product innovation working paper (PDF, 778 Kb) 31.01.14
- Customer and their loans – presentation based on analysis of the transaction data 14.02.14
- Customer and transaction level descriptive statistics methodology note 14.02.14
- Customers’ use of multiple payday lenders (PDF, 253 Kb) 10.04.14
- Entry and expansion working paper (PDF, 268 Kb) 21.02.14
- Local competition working paper (PDF, 532 Kb) 19.02.14
- Payday lender pricing working paper (PDF, 326 Kb) 19.02.14
- Prices over time presentation (PDF, 1.31 MB)19.02.14
- Payday loan products working paper (PDF, 401 Kb) 31.01.14
- Profitability of payday lending companies working paper (PDF, 564 Kb) 24.02.14
- Regulation of payday lending working paper (PDF, 286 Kb) 31.01.14
- Repeat borrowing and customers’ use of multiple lenders PDF (688 Kb) 10.04.14
- Repeat customers – presentation based on the analysis of the transaction data (PDF, 455 Kb) (PDF, 35.3 Kb) 14.02.14
- Repeat customers accompanying notes to slides (PDF, 31.5 Kb) 14.02.14
- Review of the websites of payday lenders and lead generators working paper (PDF, 641 Kb) 31.01.14
- Shopping around working paper (PDF, 685 Kb) 19.02.14
- The size and concentration of the payday lending sector working paper (PDF, 91 Kb) 14.02.14
- Use of other credit products by payday loan customers presentation(PDF, 245 Kb) 10.04.14
Evidence
Responses to Annotated Issues Statement and Working Papers
- 118 118 Money (PDF, 322Kb) 17.04.14
- CashEuroNetUK, LLC response to the annotated issues statement (PDF, 2.2Mb) 17.04.14
- CashEuroNetUK, LLC response to the competition between payday lenders and other credit providers working paper (PDF, 134Kb) 17.04.14
- CashEuroNetUK, LLC response to the customers and their loans presentation (PDF, 67Kb) 17.04.14
- CashEuroNetUK, LLC response to the entry and expansion working paper (PDF, 285Kb) 17.04.14
- CashEuroNetUK, LLC response to the payday lender pricing working paper (PDF, 55Kb) 17.04.14
- CashEuroNetUK, LLC response to the prices over time presentation (PDF, 64 Kb) 17.04.14
- CashEuroNetUK, LLC response to the repeat customers presentation (PDF, 108Kb) 17.04.14
- CashEuroNetUK, LLC response to the shopping around working paper (PDF, 87Kb) 17.04.14
- Consumer Finance Association (PDF, 495Kb) 17.04.14
- DFC Global Corp (PDF, 706Kb) 17.04.14
- The UK Cards Association (PDF, 4Mb) 17.04.14
- Wonga Group Limited (PDF, 1.6Mb) 17.04.14
CC-commissioned research
- TNS BMRB survey report (PDF, 11.0 Mb) 31.01.14
- TNS BMRB tables (PDF, 10.2 Mb) 31.01.14
- TNS BMRB technical report (PDF, 810 Kb) 14.03.14
Summaries of hearings held with parties
- Transcript of the multi-lateral hearing with consumer bodies (PDF, 326 Kb) 07.02.14
- Barclays Bank plc (PDF, 37 Kb) 07.02.14
- Lloyds Banking Group (PDF, 43 Kb) 07.02.14
- Provident Financial plc (PDF, 45 Kb) 07.02.14
Responses to issues statement
- BCCA (PDF, 113 Kb) 26.09.13
- Cash Converters (UK) Limited (PDF, 64 Kb) 30.09.13
- CashEuroNetUK, LLC 07.10.13
- Citizens Advice (PDF, 50 Kb) 26.09.13
- Citizens Advice Scotland (PDF, 395 Kb) 26.09.13
- Consumer Finance Association (PDF, 73 Kb) 26.09.13
- Consumer Finance Association supplementary response 21.01.14
- Debt Advice Foundation (PDF, 295 Kb) 26.09.13
- DFC Global Corp 04.10.13
- Law Society of Scotland (PDF, 40 Kb) 30.09.13
- Money Advice Trust (PDF, 66 Kb) 26.09.13
- MYJAR (PDF, 97 Kb) 30.08.13
- StepChange Debt Charity (PDF, 441 Kb) 03.10.13
- Think Finance (UK) (PDF, 498 Kb) 26.09.13
- Veritec Solutions LLC (PDF, 273 Kb) 03.10.13
- Which? (PDF, 261 Kb) 26.09.13
- Wonga Group Limited (PDF, 3.5 Mb) 04.10.13
Submissions
- Albemarle & Bond (PDF, 33 Kb) 30.08.13
- Amigo Loans Limited (PDF, 1.2Mb) 17.04.14
- Consumer Credit Trade Association (PDF, 28 Kb) 22.08.13
- CashEuroNetUK, LLC 27.08.13
- DFC Global Corp 20.08.13
- Equifax Ltd (PDF, 43 Kb) 20.08.13
- LOAF (PDF, 117 Kb) 21.01.14
- Mutual Clothing & Supply Co Ltd (PDF, 326 Kb) 20.08.13
- Think Finance (UK) Ltd (PDF, 34 Kb) 20.08.13
- Wonga Group Limited (PDF, 1.1 Mb) 20.08.13
Announcements
- Invitation to comment on agencies invited to tender for market research (PDF, 41 Kb) 07.08.13
- Invitation to comment on appointment of market research agency and survey methodology (PDF, 43 Kb) 20.08.13
- Invitation to comment on draft survey questionnaire (PDF, 223 Kb) 26.09.13
News releases
- CC to investigate payday lending market 27.06.13
- Payday lending investigation - issues statement 14.08.13
Phase 1
Date of reference: 27 June 2013
Summary of work
On 6 March 2013, the OFT published a consultation document setting out its provisional decision to refer the payday lending market in the UK to the CC and opened a public consultation. The consultation document identified a number of features that the OFT suspected were - either individually or in combination - preventing, restricting or distorting competition in this market. The public consultation closed on 1 May 2013.
On 27 June 2013, the OFT announced its final decision to refer the market for payday lending in the UK to the Competition Commission (CC) for a market investigation. Having considered responses to the consultation, the OFT remained of the view that there were reasonable grounds for suspecting that features of the payday lending market were preventing, restricting or distorting competition.
The features identified by the OFT were:
Variability in compliance - the OFT Compliance Review found varying levels of non-compliance with relevant law and guidance by payday lenders. The OFT suspects that those firms which invest more time and effort in complying may be placed at a competitive disadvantage to those which invest less.
Lack of cost transparency - the OFT has identified practices which make it difficult for consumers to identify or compare the full cost of payday loans effectively at the point when loans are taken out. The OFT suspects that these practices undermine price competition by rendering consumers as a whole less effective at constraining prices.
Price insensitive customers - a significant proportion of payday borrowers have poor credit histories, limited access to other forms of credit and/or pressing needs. This may make them less price sensitive which, the OFT suspects, weakens price competition between payday lenders.
Barriers to switching - there are barriers to switching between payday lenders or to alternative products or options at the point of rollover. The OFT suspects that these barriers benefit incumbent lenders and prevent, restrict or distort competition from possible alternative lenders at the point of rollover.
Market concentration - the OFT suspects that high concentration and barriers to entry and expansion exacerbate the prevention, restriction or distortion of competition arising from the features identified above.
Action
The OFT, in exercise of its powers under Sections 131 of the Enterprise Act 2002 (the Act), referred the supply and of payday loans in the UK to the CC for investigation.
Key documents
- Final decision on making a market investigation reference
- Press release: OFT refers payday lending market to Competition Commission (27 June 2013)
- Paydaylending compliance review
- Market Investigation Reference consultation paper
- Press release: OFT acts against leading payday lenders and proposes to refer the sector to Competition Commission (6 March 2013)
Contacts
Team leader
Sue Aspinall
Senior responsible officer
Mary Starks
Media enquiries
Any media enquiries should be directed to a member of our Press Office.
Opened date:27 June 2013Updated at:17 April 2014
Case type:MarketsCase state:OpenMarket sector:Financial servicesOutcome:Markets - phase 1 referral
Comment