Payday lenders could be forced to spell out the overall cost of defaulting on a loan more clearly up front and an independent price comparison website could be set up to help people shop around after a watchdog found an "absence of price competition".

The Competition and Markets Authority (CMA) suggested the possible remedies after finding that a payday customer could typically save around £30 to £60 per year if the market were more competitive.

The CMA's estimates suggest that collectively, UK customers would be £45 million a year better off if there were better competition. Given that customers take out around six payday loans a year on average, a typical customer could save between £30 and £60 a year.

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