What happened to customers, lenders, PCW and ... brokers?
Here were my predictions:
- since PCWs will not be able to survive by displaying all the lenders according to the new rules, they will only display a few lenders they earn money with and get rid of the others
- since the FCA is enforcing a search by loan amount and term, most comparison websites will look as if they were direct lenders, hence the consumer will no longer be able to differentiate comparison websites, lead generators (brokers/pingtrees) and direct lenders. Hence creating even more confusion and consumers being misled and scammed by brokers
- since the commercial viability of PCWs will be undermined, most will leave the business
- at the end of the year you will have a handful of comparison websites with the exact same listings and the exact same layout (a slider to select amount/term). That will make PCW so pointless that consumers will not even compare and just randomly clicks on lenders' names they haven't applied yet - or even worse they will just turn to credit brokers.
In my previous article I explained why some of the rules completely went against basic marketing logic and how, the already fragile PCW, would suffer from it at the expenses of a bigger Evil, brokers.
In 4 years, here's what happened:
- I have seen the number of short term loan Price Comparison Websites disappear slowly... for example thelenderslist.co.uk has completely disappeared around mid-2016. It was a listing a reasonable amount of lenders (28) at the time with objective reviews. They did not survive the new rules...
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| TheLendersList is out of business since 2016 |
- mostly big boys are left such as allthelenders, moneysupermarket, or choosewisely. Thise are money making machines and don't care about giving consumers a ''good'' list of lenders. Even worse they also list brokers among the direct lenders. All show a few lenders that are likely profitable (or paying the most) and you have to click at the bottom on ''show more'' to see a still not full list. What kind of comparison website is this? and how is it helping the consumer make an informed decision if there is only 10% of the options listed by commercial interest?
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| ChooseWisely even using forbidden terms like ''no credit check loans''... |
- to make up for the loss due to the preferable rankings, only the profitablke lenders are displayed. On Allpaydaylenders.com we are now listing only 4 lenders as all others became unprofitable. Yes, four out of around 50 lenders that we have listed on a secondary page. This is to our knowledge the place listing most direct UK lenders, and it's ours! Even allthelenders is listing only 14 direct lenders.
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| Is that a direct lender? a broker? a comparison site? They all look the same now... |
- lenders disappear one after the other (PiggyBank, 247Moneybox, TrustedQuid, Wonga, QuickQuid, Wagedayadvance...). That might not be a direct consequence of this specific regulation but overall the market is under big stress from the FCA. It might be a good thing to clean up the dirt but lenders disappearing also means comparison sites have less paying lenders to list. In some cases, that also means unpaid invoices (happened to us several times).
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| PiggyBank-rupt... one in many |
- brokers, the worst kind in the industry, are not subject to those rules and still sell leads to the most offering. As I have mentioned it several times previously, brokers are a plague the FCA needs to dal with ASAP ! This is actually unfair competition since price comparison website cannot rank lenders according to a preferred or commercial interest but brokers and their pingtrees do whatever they want and use a highest bidder strategy to rank buyers.
It's that simple: one customer fills in an online form, they collect all the given data and share it first with their top offer. For example a lender will pay £50 for a female, employed, single, earning £1200-£1500, living in London... if they accept it, the broker gets paid. If they decline, it goes to the 2nd buyer, maybe buying at £48 and so on...
So in a nutshell:
- less lenders
- less choice (overall on the market but also displayed on sites)
- less fairness
- who pays for that? Clients, who are again worse off
Once again the FCA have shown a complete misreading of the short-term loan market. What they need to do is to clamp down on brokers !
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