The Financial Conduct Authority (FCA) took over as consumer credit regulator on April 1 2014. To mark the fourth anniversary, it has published a short video on its website looking back on this four-year period.
The video begins with a statement that the FCA has “made a lot of changes to the consumer credit market.” This statement is most certainly true, and credit firms must also expect a number of additional changes to be made in the coming months and years. Credit firms of all types need to keep a close eye on communications from the FCA, and to make changes to their practices and procedures when required.
The video then introduces FCA chief executive Andrew Bailey, who said that on taking over as credit regulator, his organisation quickly identified that “there were a number of things in [the credit sector] that we were not frankly happy with.”
As examples of how the FCA has tackled these things that they weren’t happy with, Mr Bailey makes reference to:
- The price cap on payday loans, and other new rules for firms in this sector, which the video claims have saved consumers around £150 million per year
- Restrictions on the fees that can be charged by credit brokers
- How firms across the credit sector have been forced to pay £900 million of customer redress after various interventions by the FCA
This section of the video also contains the uncompromising statement:
“We’ve checked tens of thousands of firms are doing the right thing by their customers, and made those that don’t, leave the market.”
The video then shows a consumer who describes how she was accepted for a payday loan, and how she was attracted by how fast and easy the application process seemed to be. She however goes on to say that it should be harder to obtain these loans, and that firms need to check that applicants can afford to pay back their loans. To back this up, the next statement made on the video is:
“Firms must lend responsibly and treat their customers fairly.”
Other sectors mentioned in the video include:
- The credit card sector, where the FCA has introduced new rules on how firms should treat customers in persistent debt
- The banking sector, where the regulator is looking closely at the costs and other issues surrounding unarranged overdrafts
- The rent-to-own sector, where three of the largest firms have been forced to pay significant sums in redress to customers that they failed to treat fairly
The video concludes with Mr Bailey saying:
“Our commitment is that we will continue to provide regulation which ensures fair outcomes.”
Consumer credit firms should also note that their clients are becoming increasingly willing to make complaints when they believe they have suffered detriment. The latest data from the Financial Ombudsman Service (FOS) shows that the Service received 16,328 complaints about credit firms in the second half of 2017, an increase of 11% on the equivalent figure of 14,752 for the first six months of the year.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.