The Analysis Editor’s Letter


Setting the agenda


Stephen Kiely Editor, CCRMagazine stephen@ccrmagazine.co.uk


Last month, the Financial Conduct Authority (FCA) published the outcome of its review into high-cost credit, which, it claimed, “found clear evidence that FCA regulation of high-cost short-term credit has delivered substantial benefits to consumers”. The review found 760,000 borrowers in the market are saving £150m per year, firms are much less likely to lend to clients who cannot afford to repay and debt charities are seeing far fewer clients with debt problems linked to high-cost short-term credit. The FCA has, therefore, decided to leave


the existing payday loan price cap in place, and to review it again in 2020. However, the review has also established


clear concerns with other forms of high-cost credit. In particular, the FCA believes that fundamental changes in the way that unarranged overdrafts are provided may be necessary. The FCA also identified particular concerns in the rent-to-own, home-collected credit and catalogue credit sectors. The FCA is developing tailored solutions to these issues, and will consult on action to address these concerns in Spring 2018. Andrew Bailey, chief executive of the FCA,


Stephen Sklaroff, director general of the Finance & Leasing Association, said: “Our members work hard to ensure they lend responsibly and treat customers fairly. We note that the FCA has found that most firms address affordability in an appropriate way. “We welcome the FCA’s focus on


vulnerable customers, and we have recently published our own new guidance on how best to identify and support such customers.” However, Mike O’Connor, chief


The review found 760,000 borrowers in the market are saving £150m per year, firms are much less likely to lend to clients who cannot afford to repay and debt charities are seeing far fewer clients with debt problems


said: “High-cost credit products remain a key focus for us because of the risks they pose to potentially vulnerable customers. We are pleased to see clear evidence of improvement in the payday lending market after a period when firms’ treatment of customers and their business models were often unacceptable. “However, there is more that we can do, and this review is about


identifying the areas where consumers may be suffering harm so that we can focus our efforts accordingly. “In particular, the nature and extent of the problems that we have


found with unarranged overdrafts mean that maintaining the status quo is not an option. We are now working to resolve these issues while preserving the parts of the market that consumers find useful.” Alongside the review, the FCA published proposals to clarify


its rules on creditworthiness and affordability, as well as more detail on its work on motor finance, setting out the issues it is considering and the steps it is taking to develop its understanding of the market. The FCA will publish an update on this work in the first quarter of 2018.


September 2017


executive of StepChange Debt Charity, was less convinced: “Today’s announcement marks a slight tightening of some rules. It remains unclear, however, that these measures will address some of the fundamental problems that still exist in consumer credit market, including persistent credit card debt, persistent overdraft debt and multiple payday loan borrowing. “The FCA has said that the status quo on unarranged overdrafts is not an option and there is a case for fundamental reform. The charges for unarranged overdrafts are a real problem for our clients. It is disappointing that no action will be taken until spring 2018. The market is already showing signs of movement on this issue, so there is no need to delay vital changes that could address a major source of consumer detriment.” Amidst all the changes in the industry, it is


sometimes hard to take a step back and understand the progress that has been made in the high-cost, short-term credit sector: a now much smaller area, but also one which has seen a remarkable rise in standards and reduction in complaints. As always, the lending industry has made progress – and will, no doubt, continue to do so. This is just one of the issues that will play a major part in this year’s


CCRInteractive, in association with Marston Holdings, the outstanding day for the credit, collections and enforcement industy. CCRInteractive will be held on Tuesday 3 October, again at the Guoman Tower Hotel in central London, offering you all the insight and learning that you need. To be part of the day, please contact Gary on 07785 268404 or at gary@ccrmagazine.co.uk. To claim your Delegate Pack and to find out more, please contact Alison on 01702 341948 or at alison@ccrmagazine.co.uk. Do not miss your chance to be there! Enjoy the magazine!


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